iPad Sales To Drop Courtesy Cannibalization And Supply Constraints, Forecasts Analyst

By Sumit Passary | Dec 13, 2012 10:43 AM EST

The final quarter of the year will see iPad sales reduce due to supply constraints on the latest iPad mini and demand for the fourth-generation iPad 4, highly likely due to cannibalization from the iPad mini, opines an analyst.

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"iPad mini demand remains strong but shipments appear limited by supply constraints. On the other hand, build plans for iPad appear to have been reduced, likely due to some cannibalization by iPad mini. However, we believe as we enter 2013, investor sentiment will likely shift back to fundamentals," said Shaw Wu, an analyst at Sterne Agee.

Previously, Wu forecasted that the iPad mini would cannibalize a portion of sales of the new iPad. Wu's revised his predictions with sales for Q4 to go down to 23.5 million units, which is lower from the previous estimate of 25 million. Wu believes that the larger 9.7-inch iPad sales will see a decline as consumers tend to lean towards tablets with the smaller 7-inch displays.

The analyst also made a minor revision for the iPhone 5 sales with the forecast changing from 47.3 million to 47.5 million units. Wu indicated that the slight increase in the sales forecast is due to improved manufacturing and availability of the iPhone 5.

"We are at the beginning of two big product cycles," said Wu talking about the iPhone 5 and the fourth-generation of iPads.

Wu also indicates that Mac sales for the final quarter will be around 5 million units, which is lower from the initial estimation of 5.2 to 5.3 million units sold.

Wu also predicted that the overall revenue for the company for the quarter is $54.4 billion, which is slightly down from $54.6 billion.

Apple has seen stiff competition in the smartphone and tablet market in the year 2012 from rival companies. The competition seems to be growing rapidly with more products appearing in the market. Apple only has the iPhone and the iPads in its smartphone and tablet product line-up, which though popular amongst gadget enthusiasts are limited offerings when compared to competitors like Samsung.

Going forward, it remains to be seen if Apple can give more options to consumers in its iPhone and iPads line-up to keep pace with the competition in the long term.

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