Is the iPhone Finally Apple's Greatest Product?

Depending on how you measure success, you may have already considered the iPhone to be Apple's (NASDAQ: AAPL  ) greatest product. The device revolutionized the smartphone industry, and has grown to comprise over half of the business with $86.7 billion in trailing-12-month sales. The iPod fell by the wayside in terms of revenue long ago, an inevitable victim to self-cannibalization.

If you were to measure a product's success based on cumulative unit sales, though, only now might the iPhone have earned that title.

Through the end of the first quarter, Apple had sold a lifetime total of 374.6 million iPods and 356.3 million iPhones. Including its second-quarter results, the iPhone has likely already surpassed the iPod in lifetime unit sales for the first time ever -- investors just won't find out until earnings on July 23.

Source: SEC filings. Calendar quarters shown through Q1 2013.

Analysts estimate that Apple sold close to 27 million iPhones in the second quarter, which would put its lifetime total around 383 million. iPod unit sales have fallen to well below 10 million during non-holiday quarters, and at the current rate Apple should sell around 6 million iPods, which would put its cumulative total a little under 381 million.

This quarter might very well mark a milestone for Apple where the iPhone becomes its all-time best-selling product in total units.

What's more is that the iPad is off to an even stronger early start than the iPhone. The tablet still lags the other product categories, with 140.5 million in cumulative lifetime sales through March, but it took off much faster after launch than both the iPhone and iPod.

Source: SEC filings.

Apple investors have focused so intently on the iPhone business and the high-end saturation that's affecting it that they've arguably lost sight of the iPad's future potential.

There are several important reasons why the tablet market may currently be more appealing to Apple than the smartphone market. The overall lack of subsidies means that consumers are more willing to pay for innovative features. For the same reason, Apple also doesn't need to rely so heavily on third-party carrier retail stores for distribution and marketing. It's also younger, which implies more growth potential going forward. The flip side is that average selling prices and gross margins are lower.

It's quite likely that one day in the foreseeable future the iPad will become Apple's greatest product.

Apple has a history of cranking out revolutionary products... and then creatively destroying them with something better. Read about the future of Apple in the free report, "Apple Will Destroy Its Greatest Product." Can Apple really disrupt its own iPhones and iPads? Find out by clicking here.

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  • Report this Comment On July 18, 2013, at 10:27 AM, mrphil49 wrote:

    If you are looking at device sales exclusively, then you are correct. The iPad growth in enterprise and education is still in it's infancy. The increased security when the fingerprint access control is in place added to the "closed eco-system/iOS" makes Apple a sure bet. Schools want to control what K-12 students can access and enterprise wants security of sensitive data and communications.

    What this tells us, is that Apple's most important product is their unique ability to create software that enhances the human interface with devices that are just plain easy to use. The day of the paper 5 X 7 notepad and paper forms are numbered.

    Perhaps the Apple TV box with it's AirPlay and secure BlueTooth networking ability is Apple's real revolutionary device!

  • Report this Comment On July 20, 2013, at 6:33 PM, jbarrick1 wrote:

    With all the Hacking and hewing going on, the notion of fingerprint logins (to replace the 3,894 passwords we've all come to love) sounds like a huge advantage.

    Not only would it enhance the security of the iPhones, iPads, and iPods, consider that there may well be a bump in iMac tablets, spelling the end for the iMouse.

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