Gosuto Consulting

Some industry “analysts” have egg on their face today.  They bought into the hype – after coming out with conservative projections early on, they all doubled their sales estimates late Saturday, reporting “longer than expected lines” as part of their data (wow, real scientific).  Analyst Gene Munster with Piper Jaffray raised his first day sales expectations to 600,000 to 700,000 units.   Ooops.

http://www.apple.com/pr/library/2010/04/05ipad.html

“Apple Sells Over 300,000 iPads First Day”

Now, you may say, “hey, 300k units, that is still pretty amazing” – is it?  The devil is in the details.

“These sales included deliveries of pre-ordered iPads to customers, deliveries to channel partners and sales at Apple Retail Stores. Apple also announced that iPad users downloaded over one million apps from Apple’s App Store and over 250,000 ebooks from its iBookstore during the first day.”

Let me translate this for you (I took a year of Spin in college):

• This number includes DELIVERY of PRE-ORDERS.  So, this includes only iPads that were actually delivered, which means none of the 3G iPads that were pre-ordered are included in this number (that’s good for Apple).  Estimates of total pre-sales are all over the place (ranging from 150k to 500k), and Apple hasn’t released that official data, but I think a conservative estimate would be that 100K iPads were actually delivered Saturday (there were 2 weeks of pre-sales before the shipping date got pushed back to April 12th).  So, even with conservative numbers, 30% of “first day sales” were PRE-ORDERS.
• This number also includes “deliveries to channel partners”.  Note it says DELIVERIES.  It doesn’t mean they actually sold through.  So, if a channel partner (like Best Buy) ordered a bunch of units but hasn’t sold out, ALL of the iPads they ordered are included in this number.  I called my local Best Buy store (Atlanta – not a small market) – they still have “PLENTY” in stock.  If you are the CEO of Best Buy and you are thinking that the iPad is going to be a hit, how many iPads do you think you would order nationwide?  Keep in mind you have over 1000 stores.  Now take that number and subtract that from 300K.  That number isn’t sounding very impressive anymore is it?
• So now you are left with actual Retail Apple Store sales and pick-ups, the number that actually matters (because it indicates actual demand for the product after it is released and after people have actually used it – it isn’t just hype).  If you assume Best Buy ordered at least 100,000 units (roughly 100 units per store, a very conservative number), you are left with 100,000 sales for all Apple Stores on opening day.  There are 222 Apple Stores – that comes to an average of 450 sales per store.  That is hardly earth shattering for opening day sales of such a “ground-breaking” product.   That explains why the lines thinned out in just a couple hours, and why they didn’t sell out (I called the Apple Store at Lenox Mall in Atlanta, their biggest and most popular store in the city, and they are overstocked, the representative on the phone said I would have “no issues” getting one).
• Consider this, the iPhone sold 270,000 units its first day – and they didn’t have the help of pre-orders or deliveries to channel partners.  Also consider that you had to purchase a 2-year contract from AT&T to get the iPhone, which was a pretty big turn-off for a lot of people, and makes the iPhone a much more expensive product in the end.  Yet, if you read analyst reports, you’d think the iPad crushed iPhone sales.  Wow, it makes me wonder if these guys have a vested interest in Apple’s stock going up.  Oh wait, nevermind.
• I wouldn’t be bragging about a million apps and 250k ebooks downloaded.  Note it said “DOWNLOADED”, not sold.  When you consider that the iBooks app isn’t included with the device, that is 300k downloads right there.  Also keep in mind that Pages, Keynote, and Numbers all are not included with the iPad.  So basically this says that the average iPad owner didn’t even bother downloading all four of Apple’s apps used during their demos (one of which is free and is required for ebook functionality).  Apparently the average iPad owner didn’t even bother downloading an ebook either (250k < 300k) – or downloaded one and the novelty wore off – so I’d say the iPad isn’t killing the Kindle anytime soon.

I can hear you now, “Ben, why are you pulling for Apple to fail!!??”  Please understand, I LIKE Apple in general.  I admire Steve Jobs, and I appreciate what Apple has done for the industry.  What I don’t like are crappy products and Apple zealots who will buy whatever they put out, even if it is shit.  I don’t like Analysts hyping the product just to drive the stock price up.  The iPad is very pretty, but it isn’t a good product for the price, and if this is all they can deliver from years of R&D, it is a shame.  We should expect more from Apple, and buying anything they put out doesn’t do anyone any good.  Hopefully people will vote with their wallets, Apple will listen, and they will go back to the drawing board.  They could have revolutionized the tablet computer, but they didn’t.

Now, I’m going to put my money where my mouth is, go purchase an iPad today, and write a full review on it.  I will likely end up returning it, but at least I can say I gave it a fair shot, and I will approach the review process with an open mind.  Stay tuned.