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Research shows Apple customers buy more apps, pay more for them
A new report by analyst Gene Munster at Piper Jaffray says that not only are Apple users buying more apps this year than in previous years, but they're also generally paying more for them. The average iPhone user will buy 83 apps in 2011, according to Munster's research, which is 61% more than the year before. And the average price per app, after falling down to the bottom a few years ago, is rebounding at an increasing rate, as developers find more and more ways to add premium value to apps and games. In terms of background, part of the reason for this is the sheer size of Apple's App Store, which now encompasses over 425,000 apps. With that many available, it's no wonder people are finding more and more to download. The average app price rising can also be attributed to iPad apps, which Apple has generally been able to set up at a higher price, given that the iPad versions of apps are often very different experiences from their smaller-screen brethren. All good news for developers in terms of keeping the App Store growing and sustainable. And with rumors of even more iOS devices due out later this year, that's something Apple will need to depend on going forward.
Wall Street analysts think iCloud's future has a silver lining
Apple fans and developers apparently weren't the only people who liked the iCloud announcement on Monday at WWDC. As reported by Fortune's Philip Elmer-Dewitt, Wall Street analysts are almost unanimous in their positive comments about iCloud's effect on the financial future of Apple. For example, Credit Suisse's Kulbinder Garcha is quoted as saying "Although Google and Amazon are already offering cloud based offering, we believe Apple has continued to lead innovation in the services space with the introduction of its iCloud, which we believe is superior to existing cloud services from competition." RBC Capital's Mike Abramsky was even more enthusiastic when discussing the PC-Free capabilities of iOS 5, noting that by "'cutting the cord' to the PC, Apple may expand its addressable device market by 4x, addressing the ~3B handset users who have a phone -- but not a PC." TUAW's favorite analyst, Piper Jaffray's Gene Munster, also chimed in on the ability of future iOS devices to work sans PC, and commented that "Bottom line is that Apple is increasing the likelihood that consumers buy multiple Apple devices ... Apple will be giving away iCloud for free (we had expected it to be priced between $25-$99 a year) ... sharing non iTunes music will cost $25 a year. (As a point of reference, Amazon's Cloud drive could cost up to $200 a year.)" The future for Apple looks as bright as the sunlight in those architectural renderings of the proposed Cupertino campus of our favorite company.
NPD: Mac sales up 47% in March
The numbers are out on NPD's March report for computer sales, and our favorite Apple analyst, Piper Jaffray's Gene Munster, said MacBook Pro sales continued to drive Mac sales overall, boosting them up to a 47 percent year-over-year-growth. Munster says that despite an overall drop in the amount of PC sales worldwide, Apple will likely announce Mac sales of 3.6 to 3.7 million units, which is slightly more than Wall Street expects. iPod sales, however, are reportedly down according to Munster and NPD's accounting. The analyst still expects sales to come in above expectations, but they're charting a 10 percent year-over-year drop for Apple's music players. Apple is set to announce earnings during a conference call this Wednesday -- we'll be listening in, of course, and we'll let you know what we hear.
iPhone use by teens at a record high and growing
Piper Jaffray has been polling US teens on their iPhone adoption rates twice a year, and the current bi-annual report was released yesterday. In the survey, 4500 teens were asked about the iPhones that they already own or plan to purchase over the next six months. Of those surveyed, 17 percent responded that they already own an iPhone, and a full 37 percent told Piper Jaffray that they plan to buy one (or have their parents buy it for them) over the next six months. If this sample is any indication, the future looks great for Apple in the teen segment. I thought the six month time frame was telling, since even the most conservative of pundits believe the iPhone 5 will be out six months from now. Apple still owns the MP3 market with 80 percent saying they own such a device, and out of that, 86 percent own some flavor of iPod with everyone else being left in the dust. This is not all hearts and flowers though, since in the poll taken last spring, 92 percent of teens owned an iPod, with total MP3 adoption of 86 percent. It may mean that more teens are using iPhones to listen to music, with over half reporting that they listen to music on their cell phone, the highest number reported for that stat. Though it's not specifically stated, I don't think it would be a stretch to say that more teens are listening to music on Apple devices than any other brands in the category. In a question about tablet sales, 22 percent of teens say they already have one, with another 20 percent planning to buy one in the next six months. I think that we can all agree that the lion's share of those purchases will be iPads as well. [via Apple 2.0]
Tragedy in Japan hasn't "meaningfully impacted iPad 2 supply"
The Japanese earthquake had a devastating effect on the people of Japan and temporarily shut down many manufacturing facilites. Analysts speculated this disaster might have produced a shortage of key components used in the electronics manufacturing process, but according to Piper Jaffray analyst Gene Munster, this shortage will have minimal effect on the future supply of the iPad 2. Munster expects the current shortage of the iPad 2 to continue into the June 2011 quarter, but this shortage is the result of excessive demand, not component production issues. Both the iPad and the iPhone 4 could see, at most, a one to two week delay as a result of earthquake-related shutdowns. This is good news for Apple customers looking to score an iPad 2, especially those international fans who waited in long lines today, only to walk away empty-handed. Of course, there are many problems Japan faces these days that are much more important than producing computers, but it's good to hear that this isn't another issue to deal with. A resumption of Japanese manufacturing will also help to stimulate the economy in Japan and help rebuild the devastated country.
Apple: iPad 2 demand is "amazing"
"Demand for the next generation iPad 2 has been amazing." That's what Apple's spokesperson Trudy Miller told The Loop, and it's consistent with everyone's anecdotal evidence. Apple released the iPad 2 at 5 PM on Friday evening. Long lines of customers greeted the launch, hoping to be one of the first to own the hugely anticipated device. According to analyst checks, the iPad 2 sold out at many locations before the end of its first night of availability. On Sunday, Apple's online store showed a wait of 3-4 weeks to get any model of the new iPad 2. "We are working hard to get iPad 2 into the hands of every customer who wants one as quickly as possible," said Muller. Apple has not specified how many iPad 2s sold over the weekend. According to the Wall Street Journal, most analysts predict Apple sold between 400,000 and 600,000 units in the tablet's first three days on the market. Some analysts were even more bullish.
70 percent of iPad 2 buyers are new customers
Did you buy an iPad 2 at launch? Is this your first iPad? If you answered yes to both those questions, then you are similar to most people buying the iPad 2 according to Piper Jaffray analysts. Results from an informal survey of 236 people waiting in line suggests 70 percent of those customers purchasing the iPad 2 were first-time iPad buyers. This group of consumers bypassed the first generation model and waited for the new and improved version to hit retail shelves. The survey also revealed about 41 percent of those buying an iPad 2 opted for the 32 GB model, a figure that is higher than the 32 percent reported for the original 32 GB iPad. The 64 GB model and the 3G models also gained in popularity, a trend that suggests the iPad 2 will have a higher average selling price than the iPad. Piper Jaffray analyst Gene Munster estimates Apple sold about 500,000 iPad 2 units over the weekend. iPad 2s are reportedly hard to find in retail stores, and the estimated ship dates from Apple's online store are now 3-4 weeks. Based on these early iPad 2 sales, Munster considers his projection of 5.5 million units sold in the March quarter to be on the conservative side.
Gene Munster: Don't expect long lines for iPad 2
Gene Munster, a senior research analyst for Piper Jaffray, expects the lines for Apple's iPad 2 to be shorter than they were for the original iPad in 2010. Even so, Munster predicts Apple will sell over 1 million of the hotly anticipated iPad 2 in its first 28 days on the market. When the original iPad launched last year, it was initially available at about 1,200 storefronts. This year, the iPad 2 will launch at over 10,000 locations in the United States. Customers swooning over the iPad 2 can join a queue at their local Apple Store or at any Best Buy, Target, Walmart, AT&T, or Verizon location. The broad variety of choices should result in thousands of shorter lines rather than hundreds of massive crowds. Some Apple customers quietly "protested" against Munster's predictions for shorter lines. At least one avid camper already began his campaign to be one of the first to score an iPad 2 at the Knox Street Apple Store in Texas. Even Munster admits the Friday evening launch time, 5 pm on March 11, could still draw large crowds at some stores. My guess is the long wait will be worth it for that ultimate Apple fan in Texas. It's a bold statement of pride for fans of the company. And your name will live on in the annals of Apple rumor sites as that guy who camped out for the iPad 2. That's worth something...isn't it?
Munster: Mac sales up 20 percent this year
Apple's Mac sales are up 20 percent year-over-year and on target to meet expected sales of 3.6 million units in the March quarter, according to new domestic sales data from the NPD Group. Piper Jaffray analyst Gene Munster revealed the figures, and he says that he believes early numbers from the first month of Apple's second quarter of fiscal year 2011 mean Apple is on course to meet Wall Street expectations. Investors are expecting year-over-year growth of around 22 percent in the March quarter, and although growth in the US has only been around 20 percent, Munster notes that Apple has seen faster growth of the Mac platform in international markets. The sales figures may receive a further boost if Apple does indeed revamp the MacBook Pro line later this week. Munster believes that there is also continuing strong demand for the new MacBook Air, noting that the entry-level 11-inch model with its $999 price point currently occupies the most space in Apple Stores and has supported portable sales while users wait for the revamped MacBook Pro. The NPD numbers also include US iPod sales, down 10 percent year-over-year in January. However, predicting sales based on NPD figures is difficult since international iPod sales represent a larger mix than international Mac sales. That said, Munster says Apple is on track to sell between 9.8 million and 10.3 million iPods in the March quarter, 5-10 percent less than during the same period in 2010.
Bloggers and analysts predict Apple's Q1 2011 performance
Independent financial bloggers have traditionally been closer to the mark in predicting AAPL revenue and earnings than professional analysts, and one day away from the Apple earnings call, the differences are quite large -- about $2 billion dollars large. The professional analyst word on the street expects Apple to report earnings of US$5.38 per share for the first fiscal quarter of 2011, up from $3.67 per share for the same quarter last year. Revenue is expected to increase by a whopping 55 percent to $24.3 billion, with an increase in growth across the board on all Apple products except the iPod. This time the gap is the largest difference on record according to Fortune's Apple 2.0. In a survey of 10 amateurs and 44 professional analysts, the difference is quite dramatic. The consensus of the amateurs prognosticates that Apple will come in with revenues of $26.4 billion, a gap of $2.1 billion dollars or 8.6 percent. The difference in earnings per share (EPS) is even larger; it's forecasted by the bloggers as $1, or a full 18 percent higher than street estimates. Our old friend Gene Munster, senior analyst for Piper Jaffray, comes in on the low end, predicting that revenue will be reported to be $23.3 billion with an EPS of $5.06. It's not inconsequential to note: in light of Steve Jobs' medical leave of absence (get well soon, Steve), none of this has anything to do with Apple stock price tomorrow since I would expect the price to jump all over the place. This is despite German AAPL trading down 6 percent on the unfortunate news. A down opening of AAPL is expected by all, but by how much is anyone's guess. Please join us tomorrow at 5 PM Eastern for our live blog of the earnings call. Note: The author is an Apple shareholder, and this post should not be construed as financial advice.
Apple stock hits a new intra-day all time high and Gene Munster weighs in
Apple stock (AAPL) has hit a new all time intra-day high by a mile, rising 7.25 percent as of about 11 AM. At last look, it's sitting at $329.81 and is happily ringing in the new year on the first day of 2011 trading. It may be totally coincidental, but our old friend Gene Munster, analyst for Piper Jaffray, has announced a few predictions for 2011. The first non-surprise is that he (and just about everyone else) believes that the iPhone will come to Verizon, but he thinks it won't be until the March quarter with a 95 percent probability. I think he's betting low on that one. He gives a 90 percent probability to iTunes offering a cloud-based service and an 80 percent probability that cell phone providers will begin subsidizing 3G iPads (since this is presently happening in other countries, so why not here?). Gene also has some predictions that he considers rock-solid, including new laptops coming soon, a refresh of the Mac Pro in the first half of the year and new iMacs in the second half of 2011. The iPhone 5 will rear its head this summer (I'd bet the house on that one), and the iPad 2, if that's what it winds up being called, will flower in the spring. Another no-brainer will be that new iPods will be out in the fall, but then again, new iPods are always out in the fall. [via The Mac Observer]
55 people think the iPad is more valuable than the Galaxy Tab (updated)
If you read tech news today, expect to see a story making the rounds concerning a "consumer poll" rating the iPad versus the Galaxy Tab. According to the report, an "overwhelming majority" of consumers prefer Apple's tablet over its nearest Android competitor -- a whopping 85 percent of those queried felt the iPad had a higher perceived value than the Tab. Sounds shocking, right? Except there's one small problem. The "survey" (and really, you have to use the term loosely here) consisted of 65 people. Let's just say that again: 65 respondents. That's problem number one. Problem number two is that the survey was conducted by Piper Jaffray analyst Gene Munster, who is not only using a bizarre and somewhat useless metric like "perceived value" to judge these devices, but is also known for wildly miscalculating sales numbers and expectations for Apple products. In fact, Gene Munster should probably be close to the top of the most wanted list for irresponsible analysts. Some of his famous misses? Take the wildly speculative report that Apple would sell 5.6m iPads in 2010 (a baseless prediction which he quickly reassessed to more reasonable digits... the day after the device's launch), or the prediction that Apple would build its own search engine (so far so good!), and of course, Gene's news that Apple will have an HDTV on the market by 2011. Did we mention the $1,000 AAPL stock price call? No? Okay. So this latest report, in which Gene apparently just polled the families living on his block, seems beyond disingenuous. The margin of error on a group of 65 people is so high that it makes the results of the iPad vs. Galaxy Tab study all but meaningless, and further demonstrates the insidious, dangerous power of some analysts and their fantasy football stock manipulations. The moral of the story? Next time you see the names Gene and Munster in the same sentence, don't just take the news with a grain of salt -- use the whole shaker. Update: Piper Jaffray analyst Andrew Murphy (one of the other researchers on this report) got in touch and gave us some background on the sourcing and methodology for finding respondents. In his words: The respondents were chosen randomly on their way in/out of a large national retail chain. After spending time with each device, they were asked which they'd prefer and what a reasonable price for each would be. It's worth noting that that information is found nowhere in the report itself, nor is any other detail provided (type of store, geographic location, age / socioeconomic background, etc.), though this charming section is included: Research Disclosures Piper Jaffray was making a market in the securities of Apple, Inc. at the time this research report was published. Piper Jaffray will buy and sell Apple, Inc. securities on a principal basis.
Mac sales still up, despite iPad release
If the iPad is going to cut away at the audience for more full-featured computers, it's not going to be the Mac audience, apparently. Even though Apple introduced a tablet earlier this year, Mac sales are still up 35%, showing that the iPad is much more a new category all to itself than a subset of desktop or laptop users. NPD data from the month of May hints that Macs may see 19-23% growth year-over-year this year, which would top Wall Street's estimates. If there's an issue in Apple's line at all, it's the iPod -- that device is set up to be down 13% year-over-year, which is a higher drop than expected. But that's not a huge worry -- the iPad sells for more than the older, smaller devices, and rumor has it that Apple is going to refresh that line with new functionality anyway, from a cloud-based iTunes to better camera integration. So it looks, according to the data so far, like Apple has done what it wanted to: successfully created a new kind of computer, something that sits in between the mobile functionality of the iPhone and the full OS of the MacBook.
Gene Munster: Apple could sell 6.2 million iPads in 2010
Right after the iPad's announcement, Piper Jaffray analyst Gene Munster estimated the device would sell between three and four million units in 2010. Now that two million iPads have been sold in less than 60 days, Munster has revised his estimates upward. He now believes Apple will sell 6.2 million iPads in 2010. It's unlikely sales will exceed this number, but only because Apple can't seem to crank iPads out of the factory fast enough to keep up with demand. According to Munster's study, 74% of US Apple Stores were sold out of the iPad on May 21. International stores are expected to follow the same trend: strong early sales followed by limited availability of stock. For some perspective on the iPad's sales so far, it's worth looking at a Munster sales estimate from December of last year, about a month before the iPad's announcement. Munster then believed the iPad would sell 1.4 million iPads in 2010, at a rate of about 162,000 units per month. Instead, the iPad has far exceeded that 2010 sales estimate after only two months, and Apple has been selling an average of 34,000 iPads per day since its launch. Love it or hate it, there's no denying that the iPad has been a phenomenal success.
Mac sales going strong, but iPod sales down
Immediately after the iPad's introduction, Piper Jaffray analyst Gene Munster predicted that the iPad would have a minimal effect on sales of the Mac. "The gadget is a premium mobile device, not a computer," Munster said. "Consumers looking for an affordable portable computer will likely stick with the MacBook lineup." The latest NPD data has proven Munster's prediction correct. US Mac sales were up 39 percent year-over-year in April, and Munster believes Mac sales will continue to grow from 19-23% over 2009 sales. At that rate, Apple may sell as many as 3.2 million Macs during the current quarter. Part of that sales increase can be attributed to recent updates to the MacBook Pro, with forthcoming updates for the MacBook and MacBook Air also expected any day now. Sales data for the iPod is less encouraging, but this is also in line with Munster's January prediction that the iPad would likely cannibalize sales of Apple's lower-priced media players. iPod sales are down by 17% year-over-year, which is an even worse dropoff than what Munster predicted. However, there's an upshot to the decline in iPod sales: according to the data, many people deciding against buying an iPod are buying an iPad instead, leading to increased revenue for Apple. With an average price four times that of the average iPod, Munster calls iPad cannibalization of iPod sales "a net positive for Apple's business." There's no indication from NPD of what effect, if any, the iPad is having on the iPhone's sales. However, it seems unlikely that the iPad is significantly affecting the iPhone's sales compared to other factors. Numerous media leaks have pretty much cemented the notion that iPhone updates are due soon, with coverage so widespread and mainstream that even average consumers must be well aware that it's a good idea (for them) to hold off on buying an iPhone until the likely update next month. Apple reportedly told police that Gizmodo's leak was "immensely damaging" to Apple for that very reason; we'll probably have to wait until Apple's next earnings release sometime in July before we know just how immense the damage has been.
Piper Jaffray estimates a big boost in Mac sales
In a report issued today (cited by Apple 2.0 and SAI), Piper Jaffray's leading light on all things AAPL gazed into his crystal ball and served up some notes on NPD retail sales data. Gene Munster's numbers are especially interesting as we head into tomorrow's earnings report. The lowdown: Munster is looking for a Mac sales number between 2.8 and 2.9 million machines, based off of NPD's retail data showing a 25% year over year boost in Mac sales for the quarter. He's also looking for iPod sales between 9 and 10 million, and 7.5 million iPhone sales. What's weird is that NPD data showed Mac sales up 39% for January and February... perhaps there was a March slowdown as anticipation built for new laptop models. Considering that Q2 2009 was a record quarter for both revenue and earnings for Apple -- 2.22 million Macs sold, 11 million iPods and 3.79 million iPhones -- it will be interesting to see where this year's numbers end up, with a rebounding economy and more outlets for the iPhone 3GS. This is the second quarter of Apple's new revenue recognition scheme for iPhone and Apple TV, meaning every single sale of an iPhone hits the bottom line in full force (not to mention the 1/8th share of iPhone sale prices from previous quarters). Apple 2.0 has its quarterly rundown of analyst predictions at the ready, with a consensus earnings number close to 12 billion. I'll get out my dartboard and make my predictions here: Revenues of $12.79B, 3.25 million Macs sold, 7.75m iPhones sold. Disclaimer: I hold a small long-term position in AAPL.
Apple #56 in Fortune 500 rankings
Apple has moved up 15 spots in Fortune's annual Fortune 500 rankings to be the 56th largest company in the world by revenues. Apple had 2009 revenues of US$36.5 billion in 2009, up 12.5% from 2008. Despite the massive revenues, Apple still ranks third, behind HP (ranked 10th overall) and Dell (ranked 38th overall), in Fortune's "Computers, Office Equipment" industry rankings. Apple's share price total return to investors was a whopping 149%. Many believe that that's just the tip of the iceberg with Apple analyst Gene Munster predicting a year end target price of $299 a share. As of the time of this writing, Apple's share price sits above $248. The top three companies in Fortune 500's 2009 rankings were Wal-Mart, Exxon Mobile, and Chevron. In the Internet Services and Retailing industry, Amazon came in first (ranked 100 overall), Google second (ranked 102 overall), and Liberty Media third (ranked 227 overall).
Piper Jaffray: Apple sold 600-700 thousand iPads the first day
Piper Jaffray analyst Gene Munster issued a research note this morning that Apple likely sold 600-700 thousand iPads on Saturday. That's a far cry from the 200-300 thousand he originally predicted. His numbers included online pre-orders that started on March 12. It's unclear what information Munster is using for his analysis, but he does note one interesting statistic: the NYC Fifth Avenue Apple Store had 730 people in line for the iPad launch, compared to 350 for the iPhone 3GS and 540 for the iPhone 3G. Let's assume if pre-orders hadn't been available, everyone that ordered one would have shown up on day one to buy an iPad. If Munster's high-end numbers are correct, 700,000 iPads in one day is a phenomenal launch considering it's a brand new device in a brand new category. The iPhone 3G and 3GS sold one million units in three days and the first iPhone sold one million units in 74 days. The iPhone wasn't in an entirely new category, however -- after all, many buyers had previously owned a mobile phone or smartphone before. Selling 700,000 units of a new device in a new consumer electronics category in one day is incredible. It will be interesting to see if the iPad can break the one million mark by the end of its third day of availability on Tuesday (as many retail stores were closed for Easter this Sunday). With the 3G-enabled version of the iPad slated to launch later this month, there's likely to be another spike in sales for Apple's latest creation. Even though sales for the iPad will inevitably trail off after the launch day fervor, considering the strong sales numbers already reached, the iPad is definitely on track to beat the first iPhone's sales. [Via MacRumors] Thanks to Chris R. for his contributions to this post.
Munster: Apple developing a search engine
The great prognosticator Gene Munster (who spends his days working as an analyst at Piper Jaffray) has another guess at Apple's future for us: a search engine. He says there's a 70% chance that Apple will create its own search engine within the next five years -- right after that HDTV that he predicted a little while back. Obviously, putting together a search engine is a big undertaking, and once again, it seems unlikely that Apple would want to put one little toe into such a crowded pool. However, Munster's got that covered; he says that, instead of building from scratch, Apple might use some of its huge pool of cash to buy an existing database like Cuil. While that seems unlikely as well, it does make a little bit of sense. If Apple and Google really are on the rocks (sit-down between Jobs and Schmidt notwithstanding), Apple is probably looking at strategies to extricate itself from Google's search grip.
Apple to make an HDTV within two to four years?
The famous Gene Munster, an analyst at Piper Jaffray, has another wacky prediction for us: within the next two years, he says, Apple will release a connected HDTV. Unlikely, to say the least -- the thinking around the virtual TUAW offices is that Munster's way off base on this one. Not only is the HDTV market pretty darn price sensitive (Apple is, of course, not one to compete on price), but Apple has always considered television "a hobby," and they're not likely to take on a whole new market unless they think they can do something different. However, we'll give Munster his chance. He says that combining "hardware, software, and content will become a key selling point for TVs" in the future, and Apple does that very, very well. He says that the natural evolution for the Apple TV is to build an all-in-one solution with a screen for about $2000, and that Apple might even offer a subscription service in order to completely oversee the producer-to-consumer relationship. Admittedly, that does sound like something Apple might want to do. Munster also says that such a service could be ported to the iPhone and iPad for a wireless solution as well, and that makes it a pretty tempting idea. Yet again, that presumes Apple wants to get involved in television, and with most of their attention already focused on bringing content to the iPad, that's a bit of a stretch. I guess we'll wait and see. Would you buy an all-in-one TV and subscription from Apple if that's what they decided to do?
