iPad Revenue Now over The Mac

Wednesday, July 20th 2011. | Gadget News

It became clear Tuesday why Apple CEO Steve Jobs likes to promote the notion of the “post-PC era:” it is already well underway at Apple. It has taken Apple just 15 months to earn more revenue from iPad sales in a quarter than it did from Macs, and that’s coming off a quarter in which Mac growth exceeded that of the broader PC market.

The iPhone is still Apple’s most important product, with 20 million units sold during Apple’s third quarter accounting for almost half of its $28 billion in revenue. But the iPad reached a milestone during the same quarter, taking in $6 billion in revenue to the Mac’s $5 billion and becoming the second-most lucrative product in Apple’s arsenal. Apple continues to “sell every iPad it can make,” according to chief operating officer Tim Cook, who also compared demand for the iPad to a “frenzy” during a conference call following the release of stellar earnings by Apple.

With tablet competitors still struggling to find the right recipe to challenge Apple, it’s taking advantage of demand for something lighter than a PC but more capable than a phone with the iPad. Unit sales doubled from 4.6 million units in Apple’s second quarter (during which it faced supply constraints) to 9.3 million in its third quarter as more countries were able to get their hands on the iPad 2 and Apple ironed out the supply kinks to get more units out the door.

Cook acknowledged that iPad growth was perhaps eating into the growth ceiling for the Mac, which still posted respectable unit growth of 14 percent compared to last year against 2.6 percent for the PC industry as a whole, according to IDC. “We do believe that some customers chose to purchase an iPad instead of a new Mac during the quarter, but we also believe that most customers (opting for tablets over PCs) chose to purchase an iPad over a Windows PC,” Cook said on the conference call. “There’s a lot more of the Windows PC business to cannibalize than the Mac.”

Much of Cook’s statement is bluster, of course. Even with the tepid growth of the PC market Apple will have to crank out an awful lot more iPads to counter the 84 million PCs sold worldwide during the second quarter, even if PC shipments went into a sudden decline. Tablets are extremely intriguing and satisfying devices, but they have a ways to go before they can replace the PC at the heart of the digital experience.

Still, there’s absolutely no denying that there is something here. It took Apple a year to sell the first 10 million iPhones, and it just sold 9.3 million of a more expensive product in a single quarter.

There’s a reason why HP (NYSE: HPQ) bought Palm to produce its own tablets. There’s a reason why Research in Motion (NSDQ: RIMM) rushed a completely new operating system out the door not on its flagship BlackBerry smartphone, but on a tablet. And there’s a reason why Microsoft (NSDQ: MSFT) has chosen to infuse Windows 8 with so many tablet-friendly design considerations.

It’s because after nearly a decade of promises, people are finally embracing a new lightweight style of computing that Apple currently dominates. That doesn’t mean those people will never buy a Mac or PC again, but it does mean that the upgrade cycles for the bigger devices could be lengthening as people spend more and more time with their tablets, only turning to the PC when serious typing is required or more horsepower is needed.

Software developers, content producers, and anyone building a business for digital customers needs to pay attention to how far Apple can take the iPad.

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