Apple's iPad 2 Accomplishes Its Mission

Apple (Nasdaq: AAPL  ) is winning. I mean really winning, not "winning" in the Carlos Estevez sense of the word.

Reuters says the Mac maker appears to have sold more than 1 million iPad 2 tablets over the weekend. Sell-outs were common at both Apple retail stores and Best Buy (NYSE: BBY  ) outlets as cultic masses clamored for the latest iThing.

No doubt the early figures are impressive. More impressive, though, is who was buying the device. According to a survey conducted by research firm Piper Jaffray, 70% of those buying the iPad 2 were new to the device.

"Typically demand on Apple product launch days is driven by upgrades, but our data suggests Apple is gaining new iPad users vs. upgrading existing ones," analyst Gene Munster wrote in a research note obtained by eWeek, which reported on the survey.

To be fair, Munster and his team surveyed just 236 shoppers in line and the small sample size could dramatically skew the results. Regardless, it still appears that at least half of those purchasing the iPad 2 were new to the tablet experience.

Piper Jaffray's findings may help to explain why shares of Motorola Mobility (NYSE: MMI  ) are down more than 3% as of this writing. Moto's competing Xoom tablet was thought to be a compelling, if high-priced, iPad alternative for those who hadn't already purchased a tablet. But now that Apple is using the iPad 2 to convert the unconverted, this thesis no longer looks as promising as it once did.

Do you agree? Disagree? Let us know what you think about Apple's tablet strategy, the iPad 2, and what competitors might do next using the comments box below.

You can also rate Apple in Motley Fool CAPS and keep tabs on the company by adding the stock to the My Watchlist tool, our free, personalized stock tracking service.

Best Buy is a Motley Fool Inside Value pick. Apple and Best Buy are Motley Fool Stock Advisor selections. Motley Fool Options has recommended members purchase a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Apple at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Apple and Best Buy and has written Apple puts. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy is mad about March. There, I said it.


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Comments from our Foolish Readers

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  • Report this Comment On March 14, 2011, at 3:53 PM, danmiddleton999 wrote:

    As a long time Apple user and owner of iPads, Apple Tv, Macbook pros and airs, iphones, etc... I was surprised by the sellout. I thought Apple would have had a better handle on things.

    I don't do lines so we went by the store Friday afternoon and passed, lines were at least 2 hundred people longand growing.

    I figured we could come back Saturday morning and avoid the lines. Besides, it was happy hour.

    Wrongo dragon breath! More lines in the morning and no inventory to sell. Checked At&t stores, wal-mart, Target and Best Buy. Nothing in St Louis metro area.

    My point...sales will continue on the 2 for a long time and Apple shares will continue to go up. I am long Apple

  • Report this Comment On March 14, 2011, at 4:11 PM, Henry3Dogg wrote:

    @danmiddleton999

    When you say, you thought Apple would have a better handle on it, what do you propose.

    How many million units should Apple stockpile before they launch? Bearing in mind how many the US alone has consumed.

    Samsung built 2 Million Galaxy Tabs on spec, and they now have a new model ready with most of the 2 Million still unsold (although the few that were sold, were sold Smoothly...). Samsung may well end up landfilling the Tab 1 to avoid undermining the new model.

    No. I think Apple has got it about perfect. Even largely managed to keep the wraps on it.

  • Report this Comment On March 14, 2011, at 4:29 PM, fatmonk wrote:

    Timing of iPad2 is taking the hype out of XOOM. But mainly MMI is killing XOOM opportunity with some help of Adobe. Flash plug in for Android Tablet was not ready.

    Apple can make up iPad margin with accessories and apps.

    As iPad user, apps are more important the browsing the web for me.

  • Report this Comment On March 14, 2011, at 5:19 PM, deasystems wrote:

    "Cultic masses?" Good, one. Tim. When EVERYONE is a member of a "cult," is it still a cult?

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