With the current screen sizes and weights my model is close to Chi-Kuo’s
In calendar 2014 Apple sold 63.4 million iPads, which was a decline of 15% from 2013’s 74.2 million and every quarter had a decline in shipments vs. the prior year’s quarter. Also three of the four quarters had lower quarter over quarter growth rates than the prior year.
Starting with the March quarter the past two years Apple's iPads quarter over quarter unit decline has been 21% and 27%, respectively, when adjusted for channel inventory (I am not projecting a change in channel inventory in the March quarter or future quarters). Chi-Kuo is expecting only 10.1 million iPads to be sold in the March quarter, which would be a 50% quarterly decline this year and a 42% yearly decline.
I’m not expecting that big of a drop but do believe iPad sales could fall to 12 million or down 41% from the December quarter. This would make the year over year decline 31% year over year (again adjusted for channel inventory changes).
Ming-Kuo is projecting Apple's June quarter iPad sales of only 7 to 8 million units, which would make his first half number essentially 17-18 million. When I run the numbers that looks too harsh to me and I project 9.5 million in the June quarter for a total of 21.5 million in the first half.
For the year he is expecting iPad sales of 44 to 45 million units, which would be a drop of 30% year over year. He also isn’t expecting a new 12.9 inch iPad to have a significant impact anytime soon. To get to his full year number he must be estimating a strong comeback to about 26 to 28 million units in the second half.
I am only coming up with 23 million in my Apple model for the second half so it may be his comments on the larger screen iPads only pertain to the first half of the year. I can see iPad units decreasing to 44.5 million units for the year, a decline of 30% year over year, which is the same as Chi-Kuo’s.
iPad Mini’s being impacted by the iPhone 6 and 6 Plus
One of the reasons for the iPad’s projected weakness is Apple’s larger screen iPhone 6’s and 6 Plus’s. As can be seen in Fiksu’s chart below the bottom line is the Mini 3, which is having the slowest uptake of any iPad Mini. And the Air 2 (the third line from the bottom) is significantly trailing the original Air.
Two positives to keep in mind
The first positive (which is a weak one) is that comparisons from the previous quarters do get easier since negative year over year growth started in the March 2014 quarter. However again with the larger screen iPhones now available it does feel like there should be substantial year over year declines this year unless Apple is able to bring a new iPad to market that really gets users excited. And while the
The second positive to keep in mind is that the iPad’s revenue as a percent of Apple’s total revenue has declined from 19.9% in calendar 2012 to 18.8% in 2913 and 13.9% in 2014. At 44.5 million units I’m forecasting the iPad to contribute 8.1% of total revenue. The company has been able to do very well (due to the iPhone) while it has weathered the iPad weakness.
When you look back at the iPod it was 34.6% of Apple’s total revenue in fiscal 2007, 28.2% in 2008 and continued to decline over the next six years to 6.9% in 2011 and 1.3% in 2014. While I don’t expect the iPad to suffer a similar fate it does show that Apple has thrived as it cannibalizes its own products.
