iPad sales grew 44 percent in Q3

The iPad grew shipments at 26% y/y but “sales” as measured by sell-through were up 44%. Detail from Tim Cook’s discussion:

“The June to September [sequential change] was 17 million to 14 million…   as we had talked about in the July call, the June quarter contained 1.2 million increase in channel inventory and so … the comparison looks very different than our reported [shipment] numbers do… On a year-over-year basis, because of the year ago quarter having also a channel inventory build as we stock the channel to the [proper] level, the sell through year-over-year actually grew 44% and so the underlying sell through was extremely strong.”

Sell-through, (or “sales” vs. “shipments”) is a much better indicator of demand, obviously. Also see transcript for explanation of sequential decline (educational buying).

44% is not spectacular but it places the growth far more comfortably in the “high” bracket than the 26% units and 9% revenue growth that shipments data would indicate.

  • KitFR

    Is Apple expected to release first-weekend sales results for the Mini? What are people’s expectations? I find it strange that the white model sold out immediately while the black is still in stock. From what I gather, most of the rest of the world sold out. Can anyone guess why?

    • It’s tough to allocate to 34 countries right out of the gate, is my guess.

      • KitFR

        But these are online orders and they all ship out of China. Has Apple been caught off-guard by a unique American desire for white? It doesn’t add up.

      • They still must allocate per country, I’d think. US was not the first to go online. If they were all gone before the US opened, well that would look bad.

        As for the color, I don’t know. Like anybody else I can come up with a few guesses, but they all seem about equally likely.

      • El Aura

        The packaging and ‘manual’ are allocated by country (well, sometimes groups of countries by putting multiple languages on the packaging). But do iOS devices boot into country-specific languages when first powered up?

      • Joniisthecoolest

        iOS boots to a screen which shows the name of the product and the phrase “slide to unlock in cycling languages. The first thing a customer is requested to do is pick a main language and local geography, the latter for assignment to the proper “iTunes” and “App Store”.

      • My guess us that white is preferred more by women as is the mini.

      • Nikhil

        I would say that has been true up until now. Both the iPhone 5 and mini have different back designs to go with the faces, making them pretty unique and more than a pure color choice.

    • WicoMaster

      Maybe scuffgate gave black aluminum a bad name especially if you’re buying for kids.

    • jvi1000

      I heard a theory that the white model sold out because it may be more popular with ebook readers, since the white of the ebook “paper” blends in better with a white frame. But who knows, perhaps Apple just doesnt make as many of the white model.

  • oases

    Why is revenue much less than units, 26% vs 9%?
    (I’m using my Maxi Pad.)

    • Revenue per unit went from $617 to $535 as the iPad2 price was reduced.

      • El Aura

        Can this be seen as an indicator that the iPad 2 kept selling in noticeable numbers after the third-gen iPad release?

      • I think that’s a certainty.

      • actualbanker

        Can we therefore conclude that the screens on Apple gear have reached “good enough”? As amazing as retina is, many can’t tell the difference unless they look closely. There’s lots to still impove… battery life for example, but in this area people no longer need the “latest”. This may be why the iPad mini isn’t retina. Though it would be a better device, the non-retina is “good enough”.

      • The iPad’s killer feature is maximum portability without sacrificing usability. So retina is not necessary, yet. Although it would’ve been nice for Apple to have put in the A6 processor and iPhone 5 camera in there for that extra performance kick.

      • actualbanker

        Apple doesn’t feel retina is necessary, but the standard screen is “good enough”. However the battery is not yet good enough. I’m quoting Horace’s idea of “good enough”, not just making judgement on Apple products.

      • Medium DPI devices have been good enough for decades and it’s what people are used to. I think it depends on the market segment. iPad 2 makes a fantastic gift or for someone who is likely to be an occasional or casual user, as does the iPad mini, while those after a premium experience and likely to be heavy users are more likely to opt for the top end device. I think some reduction in ASP is inevitable and acceptable in order to avoid ceding the low end market to competitors.

      • There’s never been a newly introduced Apple product shipping with Retina, it’s always been an iterative refinement. I bet iPad Mini’s next iteration will have, the A6 (or A6X as needed), and an improved camera.

      • actualbanker

        Please see Critical Path for discussions of “good enough”.

        Just because Apple have never done something…

      • I think rather this tells us that when you are buying for someone else (eg parents buying for kids) the retina screen is “good enough”.
        That’s different from when you are buying for yourself. I expect that, with time, the kids will realize they are being shafted (especially since their eyes are better than those of adults) and if two years or so non-retina will not be acceptable, and will not be sold.

        There is a similar (though slightly different) dynamic with respect to CPU performance. Benchmarks obsess over long-running tasks, and so lead to a belief that CPUs are good enough because most of us are not running these sorts of tasks on our iOS devices. What benchmarks miss is that faster CPUs give a noticeable increase in snappiness, something that is very difficult to benchmark, but very obvious in usage. Meaning that, as long as Apple has stores that can show people what actual performance (ie snappiness) feels like, there is still scope for demand of new devices based on their being faster. Going from an iPhone 4 to an iPhone 5 clearly feels snappier, and ALSO makes one realize that the device is not yet so snappy that anything faster is unnecessary.

      • freerange

        IMO consumers are also realizing with the ubiquity of wifi, the cost of add-on cellular is not really needed for this device, and that with online storage such as dropbox, iCloud and iTunes Match, there is no real need for spending the extra money on maximum RAM.

  • Is the 17 million to 14 million sequential change from June to September the number of units sold or shipped? Isn’t this the first time that unit numbers of iPads has dropped from Q3 to Q4? Is this an inventory issue, a demand issue or another issue?

    On a positive note for consumers (and I would hope for Apple in the longer term) , interesting to see Apple prepared to take a reduction on revenue per unit, as the cost per unit increases and pricing pressures hold them to their previous price points, rather than reduce the cost (and quality) per unit to maintain previous profit levels.

    • The June quarter has higher demand due to k-12 orders. Cook explained it in the cc.

  • DesDizzy

    Very interesting article here;

    Charting historical price relationship Apple Macs & consumer income

  • 2Tall

    Great article Horace Dediu! World class as always. I listened to conf call but didn’t do my own math. Keep em coming. Thoughts on earnings Q1FY12?

  • gbonzo

    NOW you accept y-on-y sell-through as a good measure, but when I measured iPhone new-model-launch-corrected y-on-y sell-through demand being a consistent 94% over four consecutive quarters, you did not like those numbers, but said that iPhone grows over 100% and any lower quarter was “transitional”, then.

    Talk about number picking.

    • Plist

      I have to agree. It sure seems convenient to now choose sell through as the measure, retroactively no less. There is a reason why Tim Cook chose that measure, it’s called spin. Why is he so concerned with managing wall street expectations. This is what other companies do. Let the results speak for themselves. Take the stock hit, and prove em wrong next time.

      • Tim Cook does refer to sell-through occasionally when asked specific questions. In this case the question was whether the iPad demand was slowing. The question in this case was from Gene Munster: “Tim, can you talk a little bit about the iPad we saw a deceleration in September quarter. Was there anything in particular that might have been driving that?” You’ll see sell-through cited nine times as well in the f3q12 call with respect to iPhone and MacBook Air:
        Ideally we could use sell-through data and exclude any reference to shipments, but that is simply not possible as the data is not always available and not easily comparable. Different analysts approach the problem differently. For example in the PC market, Gartner tracks sell-through data and IDC attempts to track sell-in data. I maintain only sell-in data as it’s what companies publish but whenever I get sell-through information it adds additional potential insight into short term channel dynamics.

  • Anyone seen AMZN’s Kindle Fire vs. iPad Mini marketing material? Seems like the MKT is growing too fast for stuff like this to matter. AAPL can’t keep up with demand as it is. Will be interesting to see how the holiday buying plays out…

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  • Lassoo the web

    it is very useful article. Hope to see those unit numbers of iPad users as fast as.

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