updated 11:39 pm EDT, Tue September 4, 2012
Analyst says milestone is 'canary in a coal mine'
Needham & Company analyst Charlie Wolf noted in a letter to investors that while PCs in the educational market continue to outsell iPads, the remarkable growth of the iPad in the most recent quarters shows definitively that it is cannibalizing PC sales in the sector, a trend that will likely continue further narrow the gap. PC shipments fell nearly 14 percent or 265,000 units compared to the June quarter of a year ago, while Mac sales in education held steady and iPad sales doubled.
Mac sales to education have increased marginally in sales across the last two years, while PC sales have seen a precipitous decline over the last year, a trend Wolf believes will continue. Meanwhile, iPad sales to schools doubled from a year ago, with around a million units sold in the June quarter (compared to 1.64 million PCs). While Wolf acknowledges that some of the iPad sales represent market expansion, he says the growth of iPads and steady sales of Macs shows that the iPad is eating into "a material portion" of PC sales in the educational market.
Wolf also believes the trend will continue in other areas outside of education. Given that iPad sales have already eaten into the lower end of notebook sales, particularly in enterprise, the education market could well be "the canary in the coal mine," he said. The iPad is likely to have a more noticeable impact in the larger PC consumer market, which will also (to a smaller extent) affect even Mac growth.
Apple reported in its most recent briefings in June that Mac sales had grown only two percent year-over-year, but still set a June quarter record of four million sold. Part of that was unexpectedly strong growth in the US business market, which saw a 56 percent year-over-year growth in Mac sales and has seen overall higher acceptance of Macs over the last few years. By comparison, PC sales dropped nearly nine percent in the same period.
Sales of the iPad, however, continue to define the tablet market. Apple sold 17 million units in the June quarter, and are expected to do well with the tablet in the September quarter and heading into the holiday buying season, particularly if reports of an eight-inch iPad "mini" allegedly to debut in October are true. Wolf has previously predicted sales of 40 million iPads in calendar 2012, and Apple has already sold 28.8 million units as of June.
The iPad "mini," now thought to be a replacement for the still-available iPad 2 model, will likely be offered at a competitive price to the Android-based seven-inch tablets that so far have not done especially well in the market. If so, they should easily beat competitors and "open up" the education market as Apple CEO Tim Cook alluded to in his last conference call. The seven-inch tablet market, despite being ignored and even derided by Apple in the past, is beginning to find an audience with models like the Google-branded Nexus 7 and to a lesser extent the Kindle Fire, the latter of which is expected to get a revamp later this week.