How many iPad minis did Apple sell? 12.5 million

Faced with the choice between changing one’s mind and proving that there is no need to do so, almost everyone gets busy on the proof  — John Kenneth Galbraith

When Apple announced iPad mini I wrote in GigaOm,

At the high end, Apple could sell as many as 58 million (full year), but those chances are very very slim (1 percent). Considering all the possible scenarios, the expected value of volume is 40 million.

Apple released its Q1FY13 earnings today, let us estimate how many iPad minis Apple most likely sold. The iPad mini numbers are based on the Apple‘s report.

appleQ1_ipadThey sold a total of 22.8 million iPads (new iPad, iPad2 and iPad mini), compared to 14.03 million in the previous quarter (pre iPad mini). If you were to attribute all incremental volume to iPad mini it comes to 8.77 million. I could stop here and say my model is correct.

If you compare the Average Selling Price (ASP) between two periods, in Q4FY12 the iPad ASP (iPad and iPad2) was $508 but it dropped to $467 this quarter (Q1FY13).

ipad_mini_q1So let us plug in these numbers into the model I recently built to estimate the number of iPad minis Apple sold. We find that the 8.77 million is actually the lower limit. With the assumptions I have made, Apple likely sold 12.5 million iPad minis (all editions combined).

Apple put on some impressive iPad mini numbers. Did it cannibalize its full priced iPad? You bet it did. Last quarter Apple sold about 9.84 million full size iPad. (Again see the model.) That number dropped to 7.42 million units, thanks to iPad mini. So a cannibalization of 2.42 million units  — that is 2.42 million people who would’ve chosen full size iPad chose iPad mini.

How did I do with my previous prediction of iPad mini numbers in my GigaOm article?

I predicted an annual expected volume (considering all possible scenarios) of 40 million. But Apple could end up selling at least 50 (4 times 12.5) million iPad minis in FY13.

What did my model say were the chances of selling 50 million (full year) units or more?

Mere 12%.

As Galbraith said I could get busy arguing that is still within my scenarios and I am still correct. Galbraith’s writings have influenced my thought process in many ways, I will note his warning and not get busy with my proof.

It indeed appears I had started with some overly conservative numbers on iPad mini uptake based on the survey results I had used. Hence my model underestimated the iPad mini volumes considerably as iPad mini yearly volume could be 50-60 million units.

Model is only as good as the informed input we start with. After all we are paid to make better hypotheses and make informed assumptions.

 

 

 

 

Ideas that are convenient, popular, and acceptable have become sacrosanct

There is incessant and increasing attack on our intellect. We are fed simple ideas based on convenient samples and bombarded with regurgitation of weak ideas extended by other popular gurus.

As Galbraith wrote first in introducing The Conventional Wisdom by John Kenneth Galbraith, ideas that are convenient, popular and acceptable have become unquestioned truths. Times may change, new fads replace old fads – but our acceptance of what is convenient, familiar and popular as sacrosanct remains the same.

We now have instant communication, huge follower-ship, everywhere connectivity. Yet these remain the channels for spreading the same type of unquestioned ideas that suffer from cognitive biases and analytical errors.

Here are some nuggets from Galbraith’s essay, see how relevant these remain to what we see in social media:

  1. On attacking ideas: Anyone who attacks such [weak, incorrect] ideas must seem to be trifle self-confident and even aggressive. The man who makes his entry by leaning against an infirm door gets an unjustified reputation for violence. Something is to be attributed to be poor state of the door.
  2. Acceptable==Truth: Audiences of all kinds most applaud what is merely acceptable. In Social Comment, the test of audience approval, far more than the test of truth, comes to influence comment. (The more an idea gets blogged about, Retweeted …)
  3. Tribe Think:  Ideas come to be organized around what the community as a whole or particular audiences find acceptable. (Voting in Quora)
  4. Self-Esteem: We also find highly acceptable what contributes most to self esteem. The individual knows he is not alone in his thoughts – that he has not been left behind and alone.
  5. Power of Titles and Positions: Before assuming office, he ordinarily commands no attention. But on taking up his position, he is immediately assumed to be gifted with deep insights. Think of how we treat the ideas of those have the title “author, speaker” in their Bio. What would otherwise have been labeled as commonplace advice suddenly gets anointed as “inspiring advice” or “deep insight”.

It is time to call out that the Gurus have no robes!

Other articles:

  1. Evidence Based Management
  2. Informed Decision Making
  3. Fallacies of Cure-all Prescriptions