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Analyzing the analysts on the iPad

Comparisons that some commentators have been making between iPhone and iPad sales figures are entertaining but unfortunately flawed for two key reasons.

Firstly when consumers purchase an iPhone on launch day in 2007 they were committing to spend in excess of $2,500 over two years, whereas Saturday’s iPad buyers were committing to a one-time spend  of $499-699.  This is obviously incomparable from a financial perspective.

Secondly a purchase timing constraint existed with the iPhone on launch day which is was not present with the iPad on Saturday.  iPhone buyers commit to a two year service contract and are only likely to do so upon expiration of their existing cellphone contract.  Otherwise they suffer early termination fees or have to pay for two lines simultaneously.  iPad buyers on the other hand were purchasing a device free from such a timing constraint.  Even the 3G iPad presents no timing constraints, since the 3G service agreement can be started and cancelled at will.  So owners are not restricted by existing 3G data contracts on their netbook or laptop.

So while sales figures comparisons are nice to make, those made between the iPad and iPhone provide minimal value.

On a funnier note, one analyst estimated first day sales at 700,000, which I found pretty bizarre having spent Saturday afternoon in a New York Apple store with good stock availability and easy access to display units. Apple announced that total sales, including a month of pre-orders and launch day retail sales, amounted to 300,000 iPads.  There is speculation that around 150-240,000 of that number was for pre-orders, which would imply around 60-150,000 retail sales on launch day.  That seems sensible given the light demand for actual sales I saw during my afternoon in the Apple store.

Many have also pointed to long lines outside some stores as an indication of launch day demand.  Again, this is an cloudy conjecture as the lines were actually made up of those waiting to collect pre-orders purchased in the preceding weeks as well as those who chose not to pre-order.  Pre-order customers could choose to either receive their iPad by UPS or come to a store to pick it up.  So although the line represents those picking up their iPad on launch day, a significant percentage of those people placed their order over a period of weeks leading up to the release date.  Therefore perhaps it makes more sense to view some of these sales as demand spread over a longer period than just launch day.

The app download statistic of one million downloads also needs to be put into context.  While book reading was a major marketing point of the iPad, Apple forced iPad owners download the free iBooks application if they wanted to use it.  So it’s quite possible that say 250,000 of the 1,000,000 launch day app downloads were for the iBooks app, which really should have been included out of the box but had to be downloaded.  So while the statistic is certainly impressive, the iBooks impact should be taken into account when interpreting the one million number, as well as future iPad app download stats until iBooks is part of the out-of-the-box iPad app collection.

Neil Berman

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theonbutton.com

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Apr 5, 2010 - Posted by | Analysis, Apple | , , ,

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