How the iPad Can Get Even Bigger
Updated from 7:55 a.m. to include thoughts from Jefferies analyst.
Apple announced that it will be bringing the iPad Air and the iPad mini with Retina display to NTT DOCOMO (DCM) network, starting Tuesday, June 10. "We are extremely happy for iPad to join iPhone on NTT DOCOMO's network," Cook said in a press release. "The results on iPhone have been tremendous, and we look forward to delivering iPad to NTT DOCOMO customers."
Both the iPad Air and iPad mini with Retina display will be available on DOCOMO's Xi LTE network.Cook's comments about the iPad joining the iPhone on DOCOMO's network is important, considering the iPhone has obtained the top spot in Japan, due to the iPhone coming to Japan's largest mobile carrier. "And in Japan, where revenue was up 26% in spite of the foreign exchange headwinds and where our smartphone market share reached an incredible 55%," Cook said on Apple's recent fiscal second-quarter earnings call. On the call, soon-to-be CFO Luca Maestri noted that iPhone sales were up over 50% year over year during the quarter. In the second-quarter, Apple generated $3.96 billion in revenue from Japan, up 26% year over year, though that was down 20% sequentially, mainly because Apple's fiscal second quarter is typically its largest. "With the addition of iPad alongside iPhone, we now offer the complete lineup of Japan's most popular mobile devices on the nation's most reliable LTE network," said Kaoru Kato, President and CEO of NTT DOCOMO in the press release. "We know our customers will enjoy using iPad Air and iPad mini, and anticipate that new customers will look to experience these amazing devices on our high-quality network with our new billing plan." The iPad continues to be the top tablet in the market place, despite a slowing market overall. Research firm IDC released its state of the tablet market in a survey earlier this month, noting that the market contracted sharply in the first quarter from the fourth quarter of 2013, and rose just 3.9% from the year-ago quarter to 50.4 million units. Despite lower-than-expected growth in the tablet market, Apple still holds the lead, owning 32.5% of the space, down from 33.2% in the fourth quarter of 2013. It's possible that Apple may look to make the iPad physically larger as well, competing with some of the tablet/PC hybrid devices in the market, including the Microsoft MSFT Surface Pro 3, and the Samsung Galaxy Pro. Jefferies analyst Peter Misek wrote in a research note that the rumored iPad Pro, which would be a cross between a Mac and an iPad, may be pushed to next year. "It appears that the 12" product has been pushed out and might not come until next year," Misek wrote in a note detailing Apple's product roadmap.
On Apple's fiscal second-quarter earnings call, Cook noted the reasons for the slowdown in sales. "First, in the March quarter last year, we significantly increased iPad channel inventory, while this year we significantly reduced it," the Apple CEO said. He also noted that last year, in the December quarter, there was a "substantial backlog with iPad mini that was subsequently shipped in the March quarter," whereas this year Apple had a supply and demand balance.
Despite this perceived slowdown, Cook noted Apple continues to believe the tablet market will surpass the PC market in scale. "We continue to believe that the tablet market will surpass the PC market in size within the next few years and we believe that Apple will be a major beneficiary of this trend," Cook said. --Written by Chris Ciaccia in New York >Contact by Email. Follow @Chris_Ciaccia