iPad Cannibalization Threat “Overblown”

Seeking Alpha’s Kevin Greenhalgh observes that while many commentators think Apple’s forthcoming 5.5-inch panel iPhone 6 will cannibalize iPad sales, in his estimation, these concerns are being greatly overblown.

Greenhalgh cites for example an article by the anonymous author of Seeking Alpha’s Stock Exchange column arguing that the iPhone 6 will cannibalize iPad sales by as much as 60 percent, and endeavours to provide analysis and logic pointing to much lower iPad cannibalization expectations.

He challenges his colleague’s math that led to the 60 percent cannibalization conclusion, calling the latter “mathematically impossible,” and contends that there is also significant evidence that sales of larger phones do not cannibalize tablet sales, pointing to phones running Google’s Android operating system getting increasingly larger screens over the past few years without causing a quantifiable drop off in Android tablet sales, which, according to the most recent IDC report on global tablet sales, 11 percent in the last year with market share growing to 70%.

Meanwhile iPad sales declined over the two most recent quarters and its market share fell to 25 percent even though there has been as yet no large-screen iPhone to blame.

Greenhalgh acknowledges that a degree of cannibalization is likely, with the iPad mini particularly vulnerable, but maintains that his analysis leads him to deduce that larger iPhones will not significantly cannibalize iPads, with the iPhone 6 a net boon for Apple.

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