iPad Mini Shipments Drop as Next-Gen Model Nears

  on March 28 2013 10:31 AM

Apple's (NASDAQ: AAPL [FREE Stock Trend Analysis]) ultra-popular iPad Mini broke worldwide sales records when it was released last fall.

The company is expected to post another solid sales period when its fiscal 2013 second quarter results are announced in April. That could be the end of Apple's winning streak, however, as it appears that first-generation iPad Mini demand is beginning to wane.

According to DigiTimes, the Mac maker may reduce its iPad Mini shipments by as much as 20 percent. The decline could push shipment numbers down to 10 million -- far fewer than the millions Apple is expected to have shipped during the current period.

Two reasons were given for the decline: 1) Apple is "adjusting its reserves" for the next-gen model, and 2) Android tablet competition is beginning to have an impact.

That latter element is a tad suspect. While Hewlett-Packard (NYSE: HPQ) recently unveiled a new Android tablet, most manufacturers are holding new tablets for the third and fourth quarter.

If Google's (NASDAQ: GOOG) Nexus 7 or Amazon's (NASDAQ: AMZN) Kindle Fire HD had hurt iPad Mini sales, that would have been apparent last fall when those products were still new.

The more likely scenario is that Apple is simply cutting shipments because the market has peaked for the first-generation iPad Mini. While it is possible that Apple could merely be shifting production to the next-gen model, the company would never do so at the expense of current-gen sales.

Look at the iPhone 4 and iPhone 4S: they are still two of the most popular smartphones in the world. Apple would not kill them off -- or reduce their shipments -- to bolster the iPhone 5. That would be ridiculous.

Thus, the sane conclusion is that most of the consumers that wanted the first-gen iPad Mini have already purchased one.

Future Sales

While it is never good sign when companies reduce the planned shipments of a popular device, the presumed figure -- no fewer than 10 million units -- is still fairly impressive. At that rate, Apple will ship an average of 3.3 million units in each of the next three months. That is all but guaranteed to be more than its competitors.

In fact, it took Amazon nine full months to sell five million Kindle Fires in America. If the company had launched the first-gen model all over the world, Amazon may have been able to sell more. Even then, it would have likely fallen behind Apple.

However, there is one problem with the nwe iPad Mini estimate. Apple is believed to be gunning for annual shipments of 55 million units. If the company only ships 10 million next quarter, it could be difficult for Apple to reach that goal.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis@benzingapro.com. Follow him @LouisBedigianBZ

(c) 2013 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

 

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