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
blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Countries with the Highest Suicide Rates

The 10 Most Technologically Advanced Countries in the World

The 10 Safest Countries in the World to Live in Peace

The 10 Top Selling Smartphones in the World 2014

The 12 Biggest Shopping Centers in the World

The 10 Friendliest Countries in the World

Qihoo 360 Technology Co Ltd (QIHU), Actavis plc (ACT), Yahoo! Inc. (YHOO) Among 20 Long Ideas from Sohn Canada

The 10 Laziest Countries in the World

The 10 Most Polluted Countries in the World

The 10 Most Dangerous Cities in America 2014

The Top 10 Gold Producing Countries in the World

The 10 Tallest Buildings in the World

The 10 Richest Stand Up Comedians in the World

The 10 Fattest Countries in the World

The 5 Best Summer Jobs for Teens

The 10 Most Religious Countries in the World Keeping the Faith

The 10 Most Educated Countries in the World

The 10 Most Popular Cell Phones in the World

The 10 Drunkest Countries in the World

The 10 Most Expensive Private Schools in the World

The 10 Smallest Countries in the World

Walking Dead Season 5 Spoilers You’ll Wish You Didn’t Know

The 10 Poorest Countries in the World

The 10 Greenest Countries in the World

The Top 10 Countries with the Highest Population in the World

The 10 Most Visited Countries in the World

The Top 10 Star Wars Characters in the Iconic Series

The 10 Most Expensive Android Phones in the World

5 Reasons Why The Illuminati Is Real and a Threat to Society

The 6 Scariest Halloween Costumes Ever Screamed At

The 4 Biggest Hedge Fund Managers in the World Today

The 15 Most Densely Populated Countries in the World

The 10 Biggest Tea Drinking Countries in the World

Top 6 Ways to Improve Your Checkout Process and Close Sales

The 5 Most Profitable Online Businesses You Can Start Today

The 20 Most Profitable Hospitals in the US

The 5 Most Profitable Home Businesses to Start

The 7 Teams that Will Win the Stanley Cup in 2015

The Top 10 Most Expensive Digital Cameras to Snap Stunning Shots With

The 10 Highest Quality Fast Food Restaurants In America Today

The 8 Best Halloween Decorating Ideas to Spook Up Your House

10 Marvel Women that Should Get a Movie Right Now

The 20 Best Remixes of Popular Songs that Will Make You Forget the Originals

7 Most Expensive Cities in the World

5 Least Expensive Cities in the World

10 Celebrities Who Believe In Scientology

10 High Margin Food Products to Build a Business Around

The 10 Most Expensive Clothing Stores in the United States to Get Decked Out At

The 5 Biggest Kickstarter Scams That Swindled Backers’ Donations

The 10 Most Expensive Boarding Schools 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!