Apple Inc (AAPL)’s Japan Tablet Sales: A Precursor of Things to Come?

Page 1 of 2

With the much-ballyhooed decline in Apple Inc. (NASDAQ:AAPL) shares lately, everyone has an opinion of what’s going on in Cupertino. Is the ghost of Steve Jobs less than enamored with new CEO Tim Cook? Maybe it’s something closer to reality, like recent margin pressures, or increased competition across Apple’s entire lineup?

The fact is, Apple’s problems aren’t the result of some other-worldly interference — the explanation is much simpler than that. Apple Inc. (NASDAQ:AAPL) has tied its cart to the iPhone horse, and those market dynamics have changed drastically this past year, and aren’t going to stop changing anytime soon. With too little revenue — and even less profit — coming from non-iPhone sales, Apple’s found itself in a precarious position: Diversifying revenue opportunities, without cannibalizing existing sales.

The word from Japan
iOS Family, Apple Inc. (AAPL)Apple Inc. (NASDAQ:AAPL) Press Info

According to a recent study , the words most often used in Japanese electronics stores in December were: ‘I’ll take a Nexus 7, please.” Research firm BNC conducted an electronics store calling campaign throughout Japan to gauge tablet sales at 2,400 retail outlets during the busy December shopping season. The results were surprising and, for Apple Inc. (NASDAQ:AAPL) fans, a possible precursor of things to come.

For the first time since May 2010, when Apple Inc. (NASDAQ:AAPL) began selling iPads in Japan, Google Inc (NASDAQ:GOOG)‘s Nexus 7 tablet alternative has taken over the top spot in the market. The Nexus commanded 44.4% of Japanese tablet sales in December, while Apple’s piece of the pie dropped to 40.1%. There are two primary reasons for the change at the top in Japan: number one, price . The Nexus retails for about $200 in Japan, compared to $300 for the iPad Mini, and $500 for an iPad. Price is a concern for Apple that’s going to manifest itself in the smartphone market, too.

Reason number two is the release of Apple’s iPad Mini toward the end of last year, which caused some inventory problems, and may also have cannibalized sales of previous iPad versions, skewing the survey’s final results. We’ll need to wait and see what impact not having readily available iPads in stock had on December tablet sales, but the message is clear; in Japan, at least, consumers are ready and willing to explore alternatives to Apple Inc. (NASDAQ:AAPL), particularly when price is part of the equation.

Takeaways for Apple
Inventory problems played a part in Apple’s drop from the top in the Japanese tablet market, but it’s the price difference between iPads and Nexus that made all the difference, and that should be an eye-opener for Apple Inc. (NASDAQ:AAPL). Microsoft Corporation (NASDAQ:MSFT) can also use Google’s ascension in Japan as a learning experience. Microsoft’s foray into tablets — its Surface device — goes head-to-head with Apple’s iPad, and shares one, indisputable flaw: cost.

With a starting price of $499 for Surface, Microsoft, just as with Apple Inc. (NASDAQ:AAPL), assumes it can get consumers to spend two or three times as much than a lower-end Google, or Samsung Galaxy, tablet. But, as more and more tablets hit the market, and the lines between the alternatives become even more blurred, Apple and Microsoft will both find themselves fighting the same, uphill battle. Don’t be surprised to learn that Microsoft’s Surface sales were muted, when CEO Steve Ballmer finally opens up about Surface sales — and its price point will be the reason why.

The survey of 2,400 electronics stores, and subsequent upending of Apple’s top spot in the Japanese tablet market, isn’t the end of the world. After all, we’re talking about a total of approximately 3.6 million tablets last year, and expected sales of 4.9 million units in 2013 – chicken feed for Apple, right?

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!