4 Dec 2012

iPad Mini & iPad Shipments: Q4 2012 Estimate based on Supply, Latent Demand & Cannibalization

iPad 4 & iPad Mini Sales
With the launch of the iPad Mini and 4th Generation iPad, iPad sales are set for another holiday surge. Since we've already estimated cannibalization & latent demand for the iPad Mini, we can use these as inputs for estimating total iPad shipments for Q4 2012.

Estimating iPad shipments for Q4 is essentially a 3 step process:

1) Estimating hypothetical iPad shipments in Q4, assuming the iPad Mini was never launched
2) Estimating supply constrained iPad Mini shipments
3) Applying the iPad Mini's cannibalization estimate on the above two figures to arrive at a total shipment estimate

Hypothetical iPad Shipments in Q4 - No iPad Mini Launch

In order to estimate hypothetical iPad shipments in Q4, we need to eliminate any possible impact the iPad Mini may have on the analysis. Since, Q3 figures have already been contaminated by rumors of the iPad Mini, we cannot take them into consideration for estimating hypothetical shipments. Instead, we can look at the iPad's historical growth over alternate quarters. Since its launch, the iPad has traditionally had two strong growth quarters (or "peak quarters") during each product cycle: calendar Q2 (due to the iPad launch schedule) and calendar Q4 (holiday quarter). Let's take a look at the iPad's shipment growth patterns over these peak quarters:

iPad Shipment Growth Patterns over "Peak Quarters"

As we can see, Q4 has traditionally been the iPad's strongest quarter. The chart also shows that this growth has slowed as shipments have grown and that the estimated growth for this holiday quarter (over Q2 2012) should be about 30-35%. This gives us the following estimate for hypothetical shipments for Q4 2012:

Hypothetical iPad Shipments in absence of iPad Mini - Q4 2012

The above chart shows that iPad shipments would have reached 22.7 million units in Q4 2012, if the iPad Mini was never launched.

iPad Mini Shipment Estimate - Based on Supply Constraints

There have been numerous reports from supply chain sources that the iPad Mini's display has been in short supply because of yield problems at AUO Optronics, a new supplier for Apple. Here are NPD's estimates for monthly iPad Mini display shipments:

Monthly iPad Mini Display Shipments - NPD

The chart above shows that less than 10 million iPad Mini displays are to be shipped to manufacturers by the end of 2012. However, this does not mean that the same number of iPad Mini units will be shipped over the same timeframe, as we need to take into account the time taken for manufacturing & shipping to retail locations. This is called "cycle time", a concept I used while estimating Nexus 7 sales. Since most early stock out reports for back-ordered iPad Minis quoted a shipping time of 2-3 weeks, the cycle time would most likely fall within the same range. Using these figures, we can get the following estimate for iPad Mini shipments:

iPad Mini Shipment & Cannibalization Estimate - Q4

Based on the display shipment data above and a cycle time of 2-3 weeks, Q4 iPad Mini shipments should total roughly 6-7 million. The cannibalization estimates in the chart above are based on cannibalized latent demand from Q3. Actual cannibalization is likely to be in the same ballpark, but could vary slightly based on availability of the product to meet demand and greater consumer awareness about the iPad Mini.

Total iPad Mini Shipments - Q4 2012

We have already calculated that hypothetical iPad shipments would have totaled 22.7 million units and that iPad Mini shipments should reach 6-7 million units in Q4. The latent demand calculation also shows that, 50-70% of iPad Mini would be via cannibalized iPad sales. Now, putting these figures together, we can get an estimate for total iPad shipments:

Total iPad Shipment Estimate - Q4 2012

The chart shows that, depending on cycle time and actual cannibalization, iPad shipments should total between 24-26 million in Q4 2012, i.e. 18-19 million regular iPads (3rd/4th Gen iPad & iPad 2) and 6-7 million iPad Minis.

7 comments:

  1. Other than Samsung and Amazon etc., that refuse to release sell through sales figures, who cares about shipments other than if making an argument for lower than expected sales due to supply constraints.

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  2. Apple reports shipments in their quarterly results, not sales. The tech media has been extremely irresponsible with this. Shipments are a leading indicator for sales, as long as there's no sequential crash.

    And no company will report shipments of a subsidiary (Samsung) or of a non-core business (Amazon). Pure OEMs like Asus do report shipments.

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  3. Wow, those 8 cent an hour kids at Foxcomm must not be getting any breaks at all lol

    Hidden-Anon.tk

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  4. my 2 cents here:

    Analisys that can make sense if the assumption are correct.

    Doesn't seem so to me.

    first assumption: there are an infinite number of potential customers for a 599 $ object. we are 7 billion, but less than a billion may afford them.Subtract to this number the people that already purchased, please. That mean that will be keeping getting harder to sell to the remaining customer

    second assumption: All the world is the same. Sorry to inform that it is not. 4G isn't available widely in Europe, Asia &Australia. Meaning that the new IPAD 4 top end will not sell well in those countries and the carrier will not help with that,

    third assumption: Shipment of the Ipad in q3 declined because of the MIni Coming. This isn't a fact! May be, just may sales were really declining, forcing AAPL to release a new IPAD as well, in order to cut the price of the actual ones to try to increase audience ?


    In conclusion, if you Ipad mini are correct, I will look at something like 21 Million as the top figures.
    We will see

    ReplyDelete
  5. To be honest, those arguments don't hold much water.

    1. I'm making an estimate for Q4 2012, not 2016. Global tablet penetration is still abysmally low. We're not talking about a saturated market here. And keep in mind, my previous market share projection predicted a decline in the iPad's market share going forward, meaning the iPad's sales will grow, but competing products will grow faster. In any case, it is true that the iPad's growth will tail off going forward (and I've already taken that into account).

    2. Most iPad sales (or tablet sales for that matter) are limited to WiFi versions. 4G isn't as big a factor as Apple makes it out to be (at least for tablets). Therefore, carrier support has very little impact on tablet sales.

    3. Again, this is something I have already looked at in my tablet market share prediction. There is a difference between losing market share and losing sales. There is absolutely no reason for demand to tail off for no reason in such a nascent market. Look here for more info - http://www.tech-thoughts.net/2012/11/tablet-market-share-trends-android-ipad.html

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  6. In fact, to add to my point, I would argue that the only risk for the iPad's shipment growth (not market share) is further cannibalization, i.e. the possibility of further delayed purchases in light of low availability of the iPad Mini. That's more difficult to gauge.

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  7. We will see, Sameer. I got a good knowledge in the european channel. May be US will surprise me.
    rgds

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