Tablet makers around the globe have started to feel the double pain of (1) supply chain issues leading to reduced sales and (2) lower demand compared to a 2020 marked by the stay-at-home trends. According to IDC, tablet shipments dropped 9% in Q3, the first quarter of decline since the start of the pandemic.
But look under the hood, and a winner in the tablet space stands out. Apple saw an increase of nearly 5% in iPad shipments in its fiscal Q4. The vendor performed best among the top five, with the likes of Huawei and Samsung experiencing shipment declines of up to 46% this time (see table below).
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iPad numbers in fiscal Q4
Apple has recently reported fiscal Q4 results. Undoubtedly, the iPhone was the key topic of conversation, and not for the best of reasons. Apple failed to meet expectations on iPhone sales (47% delivered vs. 57% expected), and the supply chain crisis was to blame for the miss.
The iPhone “noise” probably masked the strong performance of the iPad. The segment saw revenues rise 21% against pre-earnings expectations of only 5% (see chart below), even though Apple also pinpointed supply chain challenges here. The feat was accomplished despite very tough 2020 comps.
IDC’s estimated 5% growth in iPad shipments vs. the 21% increase in reported revenues also suggests that Apple must have benefited from higher average prices in fiscal Q4. This could be an indication that Apple’s pricier M1-equiped iPad Pro, launched in the spring 2021, has been a hit with consumers.
Worth mentioning, Apple expects the iPad to be the only of its major product categories to experience a revenue decline in the holiday quarter. While this may sound like bad news to some, keep in mind that iPad revenues increased a whopping 41% in the comparable 2020 quarter – and then they were up another 79% in the post-holiday period.
Apple Maven’s take
The iPad is rarely mentioned as a key reason why one may consider investing in AAPL stock. However, IDC’s report makes one thing very clear: not only does Apple dominate the tablet space, with nearly 35% market share vs. Samsung’s 18%, but it is doing an impressive job at protecting and expanding its market leadership position.
I think that the outstanding performance of Apple’s tablet segment is yet another piece of the puzzle (i.e. ecosystem) that helps to support the bullish thesis on Apple stock.
Tablet shipments were down substantially in Q3, but market leader Apple saw iPad shipments rise 5%. Does this make you more confident about an investment in AAPL stock?
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)