iPad sales outpacing iPhone in initial year

Apple's tablet is proving a hotter sales item than the iPhone and the DVD player when they were first released, an analyst notes.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
Lance Whitney
3 min read

The iPad's initial sales rate has surpassed that of the iPhone and the DVD player, making it a "runaway success of unprecedented proportion," a Bernstein Research analyst said in a note to investors earlier this week.


With Apple selling 3 million iPads over the first 80 days and an estimated 4.5 million over the three months ending in September, Bernstein Research retail analyst Colin McGranahan said that the tablet is destroying all previous records of consumer electronics adoption.

Specifically, sales of the iPad have shot past the 1 million iPhone handsets sold during the smartphone's first quarter and the under 6 million sold during the full year of the phone's 2007 debut. The numbers quoted for the iPad and iPhone are all on a global basis, though McGranahan told CNET the assumption from his end is that around 45 percent of iPad sales today are in the U.S.

Sales of Apple's popular tablet have also greatly outpaced those of the DVD player, which had been the largest-selling non-phone electronic product with 350,000 units sold just in the United States in the first year, according to data from the Consumer Electronics Association (CEA). Originally unveiled in Japan, DVD players hit the U.S. market in early 1997. The first DVD players were pricey, selling for close to $1,000, though the cost quickly dropped over the following years. It wasn't until 2002 that DVD players were selling at around 4 million per quarter in the U.S., a number that's about the same today, according to the CEA.

Based on McGranahan's estimate of 4.5 million iPads sold over the past three months, which Fortune says is actually a below-average forecast among the analysts who follow Apple, consensus is that Apple has so far sold around 8.25 million tablets. Apple is due to release its earnings report for its fiscal fourth quarter October 18.

The iPad is due to capture around $12 billion in global sales for the year, according to McGranahan's note, which is also bullishly predicting sales of almost $20 billion next year, with around $9 billion in the U.S. alone. Those numbers contrast with the entire U.S. consumer PC market, which takes in sales of around $25 billion annually, and the U.S. notebook/Netbook market, which sees sales of around $19 billion a year.

McGranahan's analysis also leads him to believe that the iPad has in fact been cannibalizing sales of Netbooks and notebooks. That's been a question of some debate lately. Best Buy CEO Brian Dunn said last month that the iPad has cannibalized sales from laptop PCs by as much as 50 percent, but then soon retracted that comment. Some research firms, such as Barclays Capital, have also seen or predicted lower portable-PC sales as a result of iPad demand.

In his note, McGranahan pointed out that the consumer PC market had been growing at a robust rate just before the debut of the iPad. But since then, the numbers have declined dramatically.

Based on some assumptions, since McGranahan concedes that hard data isn't always available, Best Buy seems to have sold around $185 million worth of iPads during its last quarter ended in August. But stripping out those iPad sales from Best Buy's mobile-computing category (which encompasses notebooks, Netbooks, and the iPad), that category overall lost $120 million for the quarter. Best Buy also would be the only retail outlet to gauge sales of the iPad versus those of notebooks and Netbooks, noted McGranahan, since it's been the sole vendor to carry all of those devices over the past quarter.

Beyond portable PCs, though, McGranahan said he believes the iPad could also be affecting sales of TVs and digital cameras, based in part on how much consumers can spend these days.

"It is the rare American household that would spend $600+ dollars on an iPad and buy a TV or a PC or a digital camera in the same month... or the same quarter... or maybe even the same year," McGranahan said in his note.

With estimated sales of more than $9 billion in the U.S. alone next year, the iPad is on track to become the fourth-largest consumer electronics category, ahead of gaming hardware and cell phones and behind TVs, smartphones, and notebooks, according to Bernstein.