Let’s hear it for cannibalization? Not so fast

Larry Dignan, ZDNet:

Let’s hear it for cannibalization. The good news for Apple is that at least iPad sales at the expense of Mac revenue keeps the financials in the family.

“Cannibalization” is predicated on a big assumption – that customers buying iPads would buy Macs instead.

But is a tablet buyer really choosing between a tablet and a PC? We’re “Post PC,” remember?

  • Domicinator

    I’m so utterly disgusted with Wall Street and the media lately. I read one article this morning that was referring to Apple in the past tense–like they have already shut their doors and gone home because of their crappy earnings numbers.

    I really don’t get it. Good thing Wall Street sentiment has nothing to do with how well a company actually performs.

    • rattyuk

      Crappy earnings numbers in perspective: Apple’s profit was only a billion dollars short of Googles entire income for the quarter. Apple beat it’s own guidance by over 2 dollars – and the stock tanks. Netflix and Google beat by pennies and rose. And don’t get me started on Amazon’s 3000+ P/E while Apple’s is now a mere 7 if you back the cash out.

      • Domicinator

        Yeah–I should have said “crappy” earnings. I in no way agree with what these idiots think.

  • The distinction is irrelevant. If people are buying tablets from Apple instead of PCs from competitors, Apple gets the sale. If Apple is selling more tablets than Macs, Apple still has sales. If they are buying iPads instead of Macs, they are still buying from Apple. Apple is selling ever more iPads and iPhones. Apple’s point is that if increased tablet and phone sales are at the expense of sale of traditional hardware, Apple doesn’t care. Apple has shown that it has no problem axing or co solo dating product lines that aren’t generating healthy revenue.

    • KvH

      Tablets are less profitable than Macs, the mini is less profitable than the iPad 4. If tablet sales cannibalize macs apple makes less money. If minis cannibalize iPad 4s apple makes less money.

      If tablets cannibalize PCs apple’s profits go up because they make a sale they wouldn’t have.

      Apple prefers the lower profits from the iPads because the alternative isn’t selling more macs but selling nothing.

      • Doctorossi

        “If tablet sales cannibalize macs apple makes less money. If minis cannibalize iPad 4s apple makes less money.”

        This may be true in the short-term, but at their lower respective price-points, tablets can theoretically appeal to a wider consumer-base, creating the opportunity for volume revenue (and further volume production cost-reductions) to more than compensate for today’s slightly thinner profit margins.

      • Apple sold a lot of Macs they would not have otherwise because people got introduced to Apple with their first iPod.

        I think the “post-pc” proclamations are a little premature. We’re not there yet.

        There are likely still going to be a lot of people getting introduced to Apple for the first time by an iPad or iPad mini. When it comes time to make another computer purchase, I wouldn’t be surprised if a lot of them end up getting their first Mac. Same goes for phones and their first iPhone.

        • KvH

          Yes, that’s the halo effect. We know it isn’t occuring in great waves right now because a) # of Mac sales declined, b) apples profit margin decreased. This doesn’t mean the halo won’t pick up later. I think people keep computers longer (I still have my 2010 iMac and don’t see a reason to upgrade yet, i used to upgrade every 2 years). Also some people may have replaced a computer with an iPad and decide later they want both and pick up a computer again. But not this quarter. This quarter appeared to be dominated by cannibalization.

        • lucascott

          The Post PC talk is also often misunderstood. If you go back and listen to Cook’s own words from his own mouth, you’ll find that he’s not saying the age of computers is dead. Just the age of the computer being the end all and even primary form of tool used for its various activities. Now people are just as likely to have a smart phone, tablet, both for their email, game play and so on. The computer has gone from THE piece to merely A piece

  • Doctorossi

    “But is a tablet buyer really choosing between a tablet and a PC? We’re “Post PC,” remember?”

    Well, someone is buying more tablets and someone is buying fewer PCs. Whether that’s the same ‘someone’ in both cases may be irrelevant.

    • It’s likely the dip in Mac sales had to do with the late arrival of the new iMac in the quarter and the subsequent supply constraints.

  • Not really. And Tim Cooke specifically referred to the PC market cannibalization as well. And not for the first time.

  • lucascott

    I would say yes some folks are buying tablets over computers. Because they never really needed a computer. Granny wants email, Facebook, and that video talk thing looks nice. Why make her deal with a computer when an iPad etc is fine.