iPad sales going slower says The Notebook Company

The Notebook Company, the Pretoria-based notebook and accessories retailer – and one of the biggest suppliers of Apple iPads in South Africa – reports that sales of iPads are down 40% for the first two months of the year, compared to the same period last year.

This is according to Christopher Riley, MD of The Notebook Company, who said he had predicted the drop in iPad sales as consumers had over-spent over the festive season and their indebtedness is on the increase. He noted, however, that sales of laptops were only slightly down on the first two months of 2013.

“We were expecting a slow quarter this year. In addition, Apple has introduced a slew of products which has led to a certain amount of confusion in the market. They have also, in a manner of speaking, cannibalized their product range by bringing out too many products perhaps – products that compete for market share.”

He said he expects an improvement in sales during the second quarter, but said he was not expecting any “major upturn” during March.

“We had a very good run with iPad sales during the past three years. They are probably at their lowest point for us right now. We are currently focusing more attention on our traditional line of other branded laptops,” said Riley.

CHINA IS NOW THE BIGGEST SMARTPHONE AND TABLET USER – THE NOTEBOOK COMPANY

China is now the biggest market for smartphones and tablets, said Christopher Riley, MD of Pretoria-based notebook and accessories retailer, The Notebook Company – and one of the biggest suppliers of Apple iPads in South Africa.

“Right now China is reporting the highest number of active iOS and Android devices. Additionally, it is among one of the fastest growing markets in terms of the adoption of smart devices. Obviously, China is a huge market – but it has now also proven that it is a quick adopter of the latest technology,” said Riley.

Until the end of January 2013 the USA came in as the number one smartphone and tablet market with 222 active smart phone devices, followed by 221 million in China. But it is thought that, by mid-February, China nudged ahead of the USA.

“The percentage penetration is naturally higher in the USA due to the population comparisons, but China’s uptake is quite spectacular.”

China has a population of around 1.3 billion people, compared to the USA’s population of about 310 million people.

“Interestingly,” said Riley, “India, with a population of around 1.2 billion people, only has 19 million active smart device users. This points to an affordability issue and the state of the haves and the have-nots in that country, more than likely,” said Riley.

As storage demands increase Apple to bring out an iPad with storage of 128 GB – The Notebook Company

As the demand for more data and storage continues unabated Apple is poised to bring out an Apple iPad with storage space of 128 gigabytes, up from the current 16, 32 and 64 gigabyte versions, said Christopher Riley, managing director of Pretoria-based notebook and accessories retailer, The Notebook Company – and one of the biggest sellers of Apple iPads in the country.

“You would think people would go for less storage, what with the advent of cloud computing and icloud storage capabilities. But it seems, despite the cloud, that people want more storage capacity – hence Apple’s decision to move to market with a 128 GB unit.”

Riley said people tend to “over-buy” frequently and buy computers with features that they don’t often use – “well, not all the features, and certainly not all the capacity”.

“This,” he said, “seems to be a continuing trend. But, with the rapidly increasing demand for more and more data, storage space is becoming a concern. Rather than look to the cloud, consumers are still wanting this capacity directly from their equipment.”

Riley said storage space on tablets could reach 1 terabyte within the next three to five years.

Too many Apples a day – or on the market – cause confusion says The Notebook Company

The current infusion of Apple products being introduced onto the market is causing confusion, which, at the end of the day does not auger well for the second most valuable company in the world. Because, when consumers are confused, they are cautions when it comes to buying.

This is according to Christopher Riley, managing director of laptop and accessories retailer, The Notebook Company – one of the biggest local sellers of the Apple iPad tablet range.

“Apple is in danger of confusing the market,” said Riley. “It might be the leading seller of tablets, but the current rash of product launches – and the confusion with iPad tablet names – is not good for business at the end of the day.

“When the Apple iPad 3 came onto the market it was called the New iPad. Then, when the Apple iPad 4 was introduced it was called the New iPad with retina display. But the problem,” said Riley, “is that the iPad 3 – called the New iPad – also has retina display.

“But it doesn’t stop there. Apple, which was dethroned as the most valuable company recently by Mobil Exxon, has also introduced the iPad mini. Some consumers – certainly some of my customers – think this is actually the iPad 4.

“When consumers are confused they tend to halt, or stall, purchase decisions because they don’t want to come across as stupid. Also, the sales cycle is a lot longer because retailers, like ourselves, have to explain things to customers in more detail – or customers have more questions. This extends the sales cycle.”

Apple starts to report slowing profits

Meanwhile,  at the end of last month Apple’s share price started nosing southwards, falling to $439,88 – giving it a market capitalisation of $413 billion (R3.6 trillion), compared to oil behemoth Exxon Mobile, who clocked in with a market value of $418 billion. Apple first superseded Exxon Mobil in August 2011 as the most valuable corporation based on the value of its stock. A year later it toppled arch rival Microsoft as the most valuable firm in the world in history with its stock valued at $622 billion.

But Apple has started to see its inner core bruising after a somewhat dull forecast accompanying its record quarterly profits, which pointed to a possibly less stellar growth.  Despite a record quarterly profit investors got cagey after hearing that gross margins further down the line would be 37,5% to 39,5% lower than expectations.

To get a clearer picture of the more gloomy prognosis  one has to cast one’s mind back to when Apple’s stock price hit more than $700 a share . This was reached in  September  last year, but, since that zenith, the price has dropped by 37% . The company also shed $60 billion in market capitalisation.

The Notebook Company’s Riley said some market analysts are postulating that Apple is losing its edge due to a dip in innovation since the death of co-founder Steve Jobs. There are also tangible  signs that it is losing traction to Samsung, which now leads the smartphone market, and to others using Google’s Android operating system.

Despite Apple’s stellar performance in the past it is questionable whether it will be able to maintain the margins it is accustomed to. With the possibility of smartphone price wars Apple’s traditional market positon of holding the high ground with premium products aimed at the high end of the market may bite deeper and deeper into profits from each device sold.

“But although Apple is receiving some negative press currently, it must be remembered that the tallest trees attract the most wind velocity. Apple has reached such heights these past few years that the wind velocity they are encountering is pretty fearsome.

“But Apple is by no means rotten to its core,” Riley quipped.