iPad Air 2. Image credit: Apple
Typically, when Apple reports its financial results each quarter, either Tim Cook or CFO Luca Maestri talks about a terrific year-over-year growth of some number, such as revenue or iPhone sales. But that was noticeably lacking in the case of the iPad sales last quarter of only 12.6 million, down from Q2 2014 of 16.7 million. Apple hasn't sold that few iPads since Q2 of 2012 when iPad sales were still growing annually at a healthy rate.
And yet, for the second quarter in memory, Apple CEO Tim Cook has managed to put an interesting twist on the poor state of iPad sales. (Even Macintosh revenue exceeded iPad revenue.)
In the Q&A session, Shannon Cross from Cross Research asked the obvious question: What do you think it will take to re-accelerate iPad sales? Mr. Cook responded:
“Number one, we have to stop situations where we sell through more than we sell in. Where we don't have to have an inventory correction…. [Suggesting, if I read that right, that partners are having a tough time moving the product off shelves.]
Two, have we had cannibalization? The answer is yes. We're clearly seeing cannibalization from iPhone and on the other side from the Mac. As I've said before, we've never worried about that. It is what it is; that will play out, and at some point it wil stabilize.
This is an interesting statement by Mr. Cook. He seems very accepting of the situation as he speaks to the analysts, especially when he has previously lamented negative sales growth numbers.
Mr. Cook also went on to put a good face on things when he looked at usage statistics that have been off the charts against the competition: they are “not on the same planet.” The suggestion may be that the iPad sales, such as they are, go a long way towards feeding sales in Apple's ecosystem in other ways.
Finally, after a very positive discussion about the IBM partnership and enterprise sales, inventory corrections and “investments in the product pipeline” (new models?), Mr. Cook opined that the situation is extremely good, but when precisely sales begin to grow again he doesn't want to predict.
Listening to Mr. Cook, it sounded a lot like he feels that this is a problem that will work itself out and can't be changed by force of will. Perhaps that's to blunt analysts who view the situation with some alarm, but it may also just be a healthy dose of patience for a product still in its infancy and in serious competiton against some awfully good cannibalizing products.
It is what it is.