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Save for a rare moment of mortality three months ago, the world's most valuable tech company routinely blows Wall Street's targets away. The 37 million iPhones sold during the period far exceeded market expectations, but is that really such a surprise? Folks were waiting more than a year to get their hands on the next generation of Apple's iconic smartphone. In this country alone there are now three times as many wireless carriers supporting the device than there were during the previous iPhone 4 launch.
However, then we get to the 15.4 million iPad 2 units that Apple cleared during the holiday quarter. This is the figure that is really stunning the market.
That's a sucker punch to the gut of every Apple cynic. The flying fist came out of nowhere.
Take two tablets and call me in the morning
Analysts were actually scaling back their iPad projections in recent weeks. Morgan Keegan's Tavis McCourt hosed down his iPad target -- from 16 million down to 13 million -- earlier this month. Last month it was Sterne Agee's Shaw Wu moving from 15 million iPads to a mere 13.5 million units. Their channel checks told them that momentum was slowing for these magical gadgets.
Once again, Apple makes the pros -- and skeptics like me -- look stupid.
It was difficult to see Apple moving so many tablets when Amazon.com's (Nasdaq: AMZN ) Kindle Fire was doing what no other competitor had done in this niche by actually selling "millions" of its entry-level $199 devices. Adding to the bargain-basement pricing, Research In Motion (Nasdaq: RIMM ) was dumping PlayBook tablets for as little as $199. Even its high-end 64-gigabyte model is selling at a $400 discount to its original price tag these days. It was also during this time that Hewlett-Packard (NYSE: HPQ ) cleared out its inventory of webOS-fueled TouchPads for as little as $99 apiece.
Given all of this markdown madness, you have to wonder what the 15.4 million buyers of iPads at $499 or higher were thinking. It was a buyer's market for tablets, yet they went ahead and paid retail.
Now, before Apple fans argue that an iPad 2 is unlike any other tablet -- something that I largely agree with -- let's get into other reasons that buying an iPad 2 this past quarter was a dumb idea.
Apple released the original iPad in April 2010. The iPad 2 followed just 10 months later. Obviously, the iPad 3 wasn't going to hit the market 10 months after that. We'd be talking about a launch in December, smack dab in the middle of the holiday shopping season. However, Apple's brief history with iPads -- and slightly longer history with iPhones -- shows us that Apple rolls out updates of superior gadgets at the previous price points on a roughly annual basis.
If the iPad 3 rolls out sometime between February and April of this year -- at the same price of an iPad 2 -- why rush into an iPad 2 purchase just months or weeks before it's obsolete?
The Apple-rati will argue that Santa couldn't leave IOUs in Christmas stockings. Do you think maybe they could have been bribed on that end? Many analysts believe that Apple will take a page out of the iPhone playbook when the third generation of the iPad rolls out in the coming weeks. Instead of retiring the iPad 2 when the better iPad 3 hits the market, Apple will just shave $100 or so off the iPad 2.
The move makes sense, especially as Apple makes its push to be the tablet of choice for classrooms. The iPad 2 at $299 or the more likely $399 price point would help it crush the Kindle Fire before it gains more traction. Why would 15.4 million people buy an iPad 2 that they could have gotten for substantially less if they had waited?
Then again, the analysts predicting that Apple will cut iPad prices later this year are the same ones that blew it when they were talking down iPad 2 sales.
Still, would it have hurt these 15.4 million new iPad 2 owners to wait a couple of months for either a better price on their own gadget or at the very least a chance to spend the same amount on something better?
I'm not asking iPad buyers to "think different" as much as "think," period.
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