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iPad sales collapse? iPad mini leads to changes in buying behavior

Enterprise iPad users buying a mix of 9.7-inch and 7.9-inch units

By , Network World
March 11, 2013 09:22 AM ET

Network World - In light of speculation that the sales of the full-size Apple iPad have "collapsed," an informal and non-scientific poll of "iPad enterprises" and consultants shows instead some changing buying behaviors.

Enterprise buyers are a somewhat fixed market: If you have 500 or 5,000 sales staff due to receive an iPad, once they get them, that market is "saturated." In other cases, some of these sub-markets were considering iPhones instead of iPads, but now they're turning to the iPad mini. Some higher-education IT staff expect next fall's incoming students will bring a large crop of iPad minis because of the lower price compared to the 9.7-inch tablet.

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BACKGROUND: iPocalypse now? iPad sales "collapse" and the Web freaks ]

The "iPocalypse" meme of collapsing iPad sales was sparked because of the way a group of tech bloggers, news sites and industry analysts interpreted a market research firm's one-month estimated drop in OEM 9.7 display shipments. [For full details, see "iPocalypse now? iPad sales 'collapse' and the Web freaks"]

The data is from David Hsieh, an analyst with NPD's DisplaySearch unit who recently blogged some excerpts from a new report -- the "Monthly TFT LCD Shipment Database" -- on the company's website. Keep in mind that the full-size iPad is the only popular tablet using the 9.7-inch diagonal display.

The blog post's key passage -- the one being seized upon by tech sites -- is this: "Shipments of 9.7" tablet PC panels collapsed, falling from 7.4 to 1.3M, while 7"and 7.9"panel shipments grew rapidly, from 12 to 14M. ... The January panel shipment data may be an indicator for 2013, starting with Apple's product mix shift."

DisplaySearch's data, which tracks shipments among various suppliers, not sales of finished final products to consumers, could only be explained by a collapse in consumer demand, according to some commenters.

"Apple's supply chain is typically a well-oiled machine, and they're very good at minimizing working capital requirements by avoiding any channel stuffing issues," argues Sameer Singh, an independent analyst and founder of the Tech-Thoughts mobile industry blog. "The only possible cause of sudden drop in display shipments (even for a month) is an inventory build-up at some point in the supply chain."

"This is why I believe that a drop in sell-through can be the only realistic explanation for the inventory build-up," he says. "The only other explanation is a change in screen size and that doesn't seem likely."

Apple sold 22.9 million iPads in calendar Q4 2012, he says, "of which anywhere between 7-10 million were iPad Minis (according to most estimates). This means that 9.7" iPad shipments in Q4 2012 fell somewhere between 13-16 million units."

That estimated range compares with the year-ago Q4 total of 15.4 million, and the immediately prior quarter, leading up to the iPad mini launch, of 14 million.

"Considering the fact that this was [the holiday-driven] Q4, we should have seen a spike in purchases (at least more than Q2), with iPad Mini being sales being additive (i.e., [we should have seen] 27-29 million total shipments), but instead the full-size iPad's growth [rate] basically crashed (the market). ... Overall, the iPad Mini did expand the market, but because of this cannibalization effect, it wasn't as much as most analysts expected."

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