Could booming iPad sales save the iPhone?

iPad mini by Martin Utrecht

If Wall Street analysts went in for such things, J.P. Morgan’s Mark Moskowitz would have a sign saying “It’s the supply, stupid.” Moskowitz Thursday morning issued a note to investors, reducing his iPad sales forecast for the fourth quarter of 2012. No, it’s not due to flagging demand – the misconception dogging the Apple shares – but a shortage of tablets leading up to December.

According to Moskowitz, Apple next week may announce it sold 18.4 million iPads to close out last year, down from his previously projected 20.1 units. Coming into 2013, the popular device may become the chief revenue producer for Apple, the analyst adds…

Our research indicates that near-term supply constraints impacted iPad sell-in activity during the seasonally-stronger holiday season,” Moskowitz told investors (via Cnet).

Translation: If Apple had more tablets available to sell during the Christmas period, it would have sold them all. To get the message through some of the more stubborn demand worry warts, he repeated his point. “Supply did not improve until early December,” he wrote. “In our view, it was a supply, not demand issue.”


Unless you’ve been in a cave, you realize Moskowitz is just the latest analyst attempting to restrain anxiety over Apple’s health. A blurb published by the Wall Street Journal and based on the supply rumor published by Nikkei mentioning a slowdown in iPhone 5 supplier orders set off days of Apple losses.

Chart via NPD.

And earlier today, the same Nikkei newswire is now saying that Apple’s tablet sales in Japan took a hit as more affordable Nexus 7 gained ground. Recently, a number of Apple watchers have explained demand for the new iPhone hasn’t wavered.

Indeed, a ChangeWave survey found 1 out of 2 smartphone consumers intend to buy an iPhone in the next three months. Likewise, the brief iPad supply problem was just a “blip”, according to the analyst.

Chart via ChangeWave Research.

While a steadfast supply-side analyst, Moskowitz doesn’t appear to have his head planted firmly in sand. Instead, he expects the iPad will become a greater revenue source for Apple as iPhone demand eventually cools somewhat.

“Barring entry of another new category, the iPad likely will need to shoulder more of the incremental revenue growth as the iPhone’s incremental growth starts to taper off in coming years,” he predicts.

iPad mini (Minimally Minimal 002, white, desk, Magic Mouse)

Recently, we reported on some Wall Street observers who believe Apple could this year or in 2014 reinvent the living-room television, creating such a new line of products.

According to J.P. Morgan, the global smartphone market will grow 30.5 percent in 2013 while the iPhone’s market is expected to grow at a slower rate: 28.6 percent. Strategy Analytics earlier counted a billion smartphones in use and accounting and consulting firm Deloitte forecast that global smartphone shipments will exceed a billion units in 2013 as the total smartphone installed base tops an astounding two billion users.

Still, Moskowitz says purveyors of iPhone doom-and-gloom are participating in “bear mongering”. What some view as a weakening of demand for the Apple handset is actually a sign of higher profits fueled by a more efficient supply chain.

iPhone 5 (black, front, EarPods, thumbnail)

If Apple can show a forty percent gross margin on the iPhone 5, the analyst believes most “bear mongering” will fade away.

The analyst forecasts Apple will announce sales of 47.9 million iPhones during the holiday quarter, 25 million of those iPhone 5 units.

Apple will release its first quarter financial report Wednesday, January 23. Perhaps that will silence some of the gloomier predictions depressing the markets.