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How the iPad is driving Apple’s business

iPad 2

When Apple released its third-quarter 2011 earnings results on Tuesday,  the numbers were, as is becoming almost customary for the Cupertino crew lately, a huge blow-out. Success was spread over many parts of the business, particularly the company’s flagship products, the iPhone and the Mac. Both are growing and show that Apple is on a tear with the entirety of its business. But those iPad results? Those were fairly stunning.

While Android phones are outpacing the iPhone in market share, it’s clear that Apple is not anywhere close to giving up its lead in the tablet race. And despite the seemingly endless train of new tablets popping up, Apple is putting more space between its tablet and the rest of the field.

Here are the most important numbers from Apple’s earnings that show that the iPad is seemingly unstoppable, and clearly Apple’s most important product.

$6 billion. That’s how much money Apple made from the iPad just in April, May and June of this year. The key is that Apple now makes more money off the iPad, a product slightly more than one year old, than its Mac lineup. Apple pulled in just under $5 billion in revenue from Mac desktops and notebooks during the same quarter.

The people scooping up iPads are not just gadget hounds and consumers with expendable income. Buyers include large corporations who are handing them out to employees to help them do their job, something Apple has been actively pushing for a while. But Apple is also getting a boost in iPad sales even from sources the company didn’t anticipate.

“We sold more iPads to K–12 [schools] than we did Macs, which is absolutely shocking,” said Apple COO Tim Cook on a conference call with analysts on Tuesday. “We never would have predicted that.”

Shocking, perhaps. But probably not unwelcome. Apple very likely doesn’t mind getting kids used to working on iPads in elementary school.

9.25 million. That’s how many iPads Apple sold during the quarter. That blows away what Apple sold a year ago, just 3.3 million iPads, and is a 183 percent bump. So what’s changed in the past quarter? Apple’s obviously had more than a year to advertise the product and build a customer base. But an important step is that Apple’s gotten its iPad supply-chain act together. If you’ll recall the situation a year ago, the original iPad was extremely hard to find. Last year Apple didn’t catch up on the seemingly insatiable demand for the original iPad until later in the summer.

Apple admitted earlier this year that it couldn’t make iPad 2s fast enough to keep up with demand. Now Apple is still selling “every iPad 2 it makes,” but it also said it was able to make more iPads 2s during the most recent quarter than it did in the same period a year ago. So while demand is still ahead of supply (“Sales of the iPad 2 have been absolutely a frenzy,” said Cook), they’re getting closer to meeting it. Cook went as far as to say that in some markets they had actually caught up and were able to be in some sort of an equilibrium with demand and supply. He did not, however, expand on which markets.

14 percent. That’s actually not an iPad number. That’s how much Mac sales grew during this most recent quarter compared to the same quarter a year ago. While iPads are outgrowing Macs, they’re doing it without significantly affecting the Mac business.

Sure, Cook allowed, “we do believe that some customers chose to purchase an iPad instead of a new Mac during the quarter. But we also believe that even more customers purchased an iPad over a Windows PC. There’s a lot more of the PC business to cannibalize over the Mac.”

Apple has been banging the “post-PC” drum pretty hard since it introduced the iPad, and at least some of its tablet competitors are selling the tablet as a PC in a different form factor. Surging iPad sales in addition to steadily growing Mac sales could mean that Apple customers are buying into Apple’s view of the computing world, too.

222 million. That’s the total number of iOS-based devices that are floating around in people’s pockets, purses and briefcases: iPhones, iPads and iPod touches. That’s compared with 130 million Android devices that Google recently announced. While the iPhone has a three-year head start on the iPad, it’s clear that Apple’s tablet is pushing those numbers up.

$2.5 billion. That’s the money Apple paid back to developers whose apps sold through its store so far. That, along with the previous iOS device tally, are meant to be siren calls for developers.

The number of iOS devices represents the continued viability of the iPhone as a platform for selling apps and the growth of the iPad. These are numbers Apple likes to remind app makers of regularly. It’s a strategy to remind those who are or might be attracted to the growing number of Android gadgets floating around that not only is iOS continuing to grow, it’s also good for business.

Photo courtesy of Flickr user William Hook

12 Responses to “How the iPad is driving Apple’s business”

  1. The iPad is driving the Mac to extinction. Suddenly, The Mac mini has become the iPad mini with no optical drive. The Mac OS has been invaded by bits and pieces of IOS even though some,like the app starter, are ridiculous on a large screen. I love my macs, but the software is rapidly going down hill to accommodate the iPad user.

  2. I saw an ad on TV yesterday for a table (I forget which one) that was trying to advertise things like an ethernet port, hdmi connection, and usb.

    Who do they think they are selling these things to? Maybe they should ask Apple.

  3. Impressive numbers! The right combination of aesthetics, function, mobility and marketing is probably one of iPad’s strengths in maintaining its lead.

    Competitors would not only have to invest on technology but also on marketing strategies for their products to get at least a bite of Apple’s iPad market share.

  4. I almost spilled my coffee when I looked at the astounding numbers. Here’s what my caffeine deprived brain said:

    1. The book publishing industry is going to be disrupted faster than I even expected. I don’t know how book publishers are going to survive with their current business model. When a writer can publish their book digitally — there is no need for a traditional publisher. If you separate editing, design from the original publishers, they are left with distribution and marketing. Publishers are not that good when it comes to marketing a specific book because they have more than one title they are pushing on the street. This leaves distribution to book stores — which are going away.

    2. How does anyone catch up with iPad from a supply perspective? I am not even talking about the ecosystem of developers. Every time Apple doubles their production, they most likely reduce their hardware cost by 20% — for the time being. The lower the cost, the more people buy it. It becomes a self-reinforced, feedback loop.

    Wow. I would not want to compete with Apple in these sectors. The only way to compete is through book readers like Amazon is doing with Kindle. But that’s a different market application for the time being.

  5. Apple is more of a hardware company than a software company. Their MAC OS is not that user friendly to me, Ubuntu IMHO is a much better OS compared to it. What I like about apple is their hardware, the combination is just superb. I just hope HTC start making laptops since I could say that both are equally competent in manufacturing premium items.

  6. Does anyone own any Apple shares? Hahaha… I heard AAPL reached $400 during after hour trading! Pretty amazing, if you ask me.

    I recently started transitioning my mobile productivity to the iPad 2 which I bought last week. I downloaded a fully featured text editor, Textastic, and other apps such as Dropbox, Bamboo Paper, Remember the Milk, and some other apps to help me manage my projects.

    One thing to note… Apple is selling millions of iPads, but we’re forgetting to mention all the accessory makers. Thanks to Apple, they stay in business, provided their products are at least mediocre, haha.

  7. Virtuous

    Google is even more dependent than Apple on their smartphones. Apple is much more diversified with the iPhone, iPod Touch and iPad. Android tablet sales pale in comparison to the iPad.

    • DaveMTL

      That is because they cannot hide behind subsidies as they do with phones. When Apples are compared to apples, Android does not do so well… Kinda sounds weird that one, don’t it?!!….
      All to say that when people must pay up-front for a device, quality and Apps begin to matter more than “Hey Look! I got my phone for free!!!”. That’s what drives most Android sales.

  8. Thanks for the info, but an important point is being missed here – Apple is overly reliant on the iphone. That could be its nemesis unless it price-tiers the smart phone market to expand market share.

    • DaveMTL

      Remember the chart Steve showed at the unveiling of the iPhone which showed the relative size of various markets? I was amazed how the game console market was much smaller than I was led to believe. The phone market is massive relative to all others. It is normal that it be the dominant component of Apple stable.