Apple: The Stark Contrast Between iPad And Surface Sales

Jul. 23, 2015 12:19 PM ETApple Inc. (AAPL), MSFT311 Comments

Summary

  • iPad sales revenue continued to trend downward in the most recent quarter, down 23% y/y.
  • In contrast, Microsoft was able to claim 117% growth in Surface revenue y/y.
  • Claims of Microsoft's ascendancy in tablets ignore the fact that iPad outsells Surface by 5/1.

A recent SA article on Microsoft's earnings release pointed to the "stark contrast" between the iPad sales trend and that of Surface. The percent gain for Surface was primarily due to terrible prior year sales performance. The trend in iPad will likely be reversed by the forthcoming release of iOS 9 and the 12" iPad Pro.

The Difference in Consumer Demand

A recent article by SA contributor L&F Capital Management on Microsoft's (NASDAQ:MSFT) fiscal 2015 Q4 earnings results painted a bleak picture of Apple's (NASDAQ:AAPL) iPad compared to Surface:

Surface sales grew 117%, starkly contrasting Apple's poor iPad performance MRQ. The difference between consumer demand for the Surface vs. the iPad in the tablet market only continues to widen . . .

I found this statement a little curious since I knew that iPad sales revenue was still quite a bit higher than what Microsoft reported for Surface revenue for the June quarter. I decided to assemble some data comparing iPad and Surface sales for as far back as Microsoft has been reporting Surface revenue, which I believe is calendar Q3 of 2013. The chart below summarizes the data.

The downward trend, allowing for seasonality, of iPad sales is very visible, but also apparent is the fact that Surface sales are not really growing explosively, as the 117% y/y comp would imply. In the year ago quarter, Surface sales were a paltry $410 million.

The slight bumps in Surface sales have corresponded to the introduction of new generations of Surface. In 2013 Q4, it was the new Surface 2 and Surface Pro 2. In 2014 Q3, it was the introduction of the Surface Pro 3. In 2015 Q2, it was the new Surface 3.

The introduction of new Surface models has made for terrific y/y comparisons, but hasn't really moved the

This article was written by

Mark Hibben profile picture
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Balanced, expert investing strategies from a technologist's perspective
Mark has a masters in Electrical Engineering from USC, is an independent iOS developer, and blogs about technology trends and companies, the focus of his investments.

Disclosure: I am/we are long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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