Did Apple’s iPad Break its Streak of Revenue Drops

Since the start of the year 2014, Apple (NASDAQ: AAPL) has posted consistent declines in terms of iPad sales.

Although the mentioned product line has never been as significant as the iPhone when it comes to the profitability of the Cupertino, California-based tech giant, these sales declines still adversely affect Apple’s performance. During the fiscal year 2013, the sales of the device amounted to $32 billion, reflecting about 18.7 percent of the total revenue of the tech giant. After 2 years, the sales of the iPad had plunged to $23.2 billion or equivalent to 9.9 percent of the total revenue of the iPhone maker. During the first two quarters of the current fiscal year, the decline in sales has resumed at a double-digit rate.

Yet, the Cupertino, California-based tech corporation rolled out the new 9.7-inch iPad Pro during the latter part of March—close to the beginning of the Q3. This development has aided the iPad to finally return to growth.

The latest 9.7-inch iPad Pro became the first new iPad to be released during the spring since the 3rd gen iPad had been launched in the year 2012.

This is the reason the CEO of Apple Mr. Tim Cook was very confident to announce to investors during the earnings call on April that the iPad product line would register its best revenue on a year-over-year basis in more than 2 years during the 3rd quarter.

By the end of the previous quarter, the new iPad Pro reflected 1.1 percent of all iPad usage, according to Fiksu—a mobile marketing firm. During the third quarter, the 7.9-inch iPad Mini 4 and the 12.9-inch iPad Pro also experienced a sluggish but steady rate. In addition the usage of iPad Air 2 significantly shot higher during the mentioned period, implying strong sales of the model.

Regardless of whether the iPad sales dropped year-over-year, the revenue of the iPad product line most likely edged higher. The reason behind this is that the new iPad Pro models are much more expensive compared to the average iPad out on the market during the recent years. The iPad Pro can be availed at $599, while the bigger one tops out at about $1,229.

Given that the two iPad Pro units seem to have produced approximately 30 percent to 40 percent of the overall iPad shipments during the previous quarter, then the average selling price (ASP) is most likely near $500. With the given ASP, the tech giant would generate double-digit year-over-year growth in terms of revenue from iPads, although Apple only shipped about 10 million of the devices during the previous quarter.

In the past few years, the demand for the new iPads has been disappointing, when new iPad launches would always trigger a rally in sales. However, demand may have been enough for the iPad to experience revenue growth again during the past quarter.

This new development would be extremely favorable for the Cupertino, California-based tech giant, particularly if Apple’s management estimates the return to revenue growth as sustainable over the next couple of quarters. Furthermore, this would be great for the company, now that it can no longer depend on consistent growth from the sales of its iPhone to push its overall financial results higher.

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