On the Brink of Apple Earnings Report: A Look at iPad and iOS Performance

On January 24th at 5PM EST, Apple is scheduled to release their Q1 earnings report after the end of the trading day. Analyst expectations are up after a strong holiday season, despite a disappointing Q4. Apple is projected to report revenues of $38.73 per share and earnings per share of $9.97 – buoyed by robust sales of both the iPhone and iPad. Since the introduction of iOS, Apple has reported sales figures for the iPhone totaling 146.1 million units, whereas the number of iPads sold has topped 40 million. With the release of the iPhone 4S this fall, and the anticipated launch of the iPad 3 in March 2012 as well as the expected announcement of the iPhone 5 later this year, it has been quite some time since Apple has failed to impress.

Chitika Insights has been covering Apple from a market perspective for over three years. Over the past year, we have written several articles detailing the tablet and mobile market, including Apple’s products. Here are a couple of key findings we have found from our research this year and how it relates to Apple’s performance:

iPad Crushing the Field in the Tablet Market

At Chitika, we believe that one of the main reasons driving such optimistic analyst expectations may be Apple’s success in the tablet market. During the 2011 fiscal year, Apple sold 32 million iPads. During Q3 2011, the first full quarter of iPad sales, Apple sold 9.25 million iPads, a 183% increase in year on year sales. Conservative estimates have projected the Apple iPad to sell 48 million units during the calendar year of 2012. The iPad has even been anticipated to continue to sustain its market leader position over the tablet market until 2015, when tablet computers will be selling 60% as many units as PCs, according to Forrester and Gartner research. Within the Chitika network, we can directly observe the iPad exhibiting its dominance since it generates approximately 15% of all mobile traffic (which includes mobile as well as tablet ad impressions). In fact, other popular tablets such as the Kindle Fire or the BlackBerry PlayBook each generate less than 2.5 imps per 100 iPad ad impressions, respectively (see the graph below).

iOS Losing Market Dominance

Apple has had great successes in the tablet market, but one potential place for improvement for 2012 is iOS’s waning share of mobile traffic. This month, just after the end of the holiday season, marked the second month in a row in which the Chitika network observed Android surpassing iOS in total web use (51.7% vs. 46.9% in our network – which includes tablet and mobile devices). Compared to Apple’s judiciously managed supply chain, Google’s open standards have allowed Android to not only appear on a wide array of devices, but establish a presence across major cellphone providers. Additionally, the appearance of Android devices at multiple price points allows the OS under-cut Apple significantly while appealing to a broader range of consumers. Despite this, Apple’s strong performances in both the smartphone and tablet markets imply strong sales performance as we move into 2012.

What’s next for Apple?

According to three people familiar with the product, the iPad 3 is expected to become available to consumers in March 2012. The latest incarnation of the iPad will run on a quad-core processor, work with next-generation wireless networks, and use a new and improved high-definition screen. Apple has also undertaken a strategy of reinventing its product base with the introduction of iBooks 2, a platform designed to compete with the textbook industry by offering digital products at a lower price point, increasing their accessibility. Selling over 350,000 textbooks in the first three days, the program is already enormously successful, and will likely drive iPad sales in the future. Although details have yet to emerge surrounding the upcoming iPhone 5, if past history is any indication of future performance, the iPhone 5 will be a blockbuster.

Stay tuned for future coverage of Apple and its role in the tech world coming out of Chitika Insights as we continue to report on trends in the mobile device industry.