Apple CEO defends iPad sales, but admits softer demand

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CEO Tim Cook said sales met its internal projections, even as he acknowledged it disappointed Wall Street.

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The iPad MiniSarah Tew/CNET

Don’t worry about the iPad. It’ll be just fine.

That’s according to Apple CEO Tim Cook, who offered his defense of the iPad after the device posted its second consecutive quarter of declining sales and again missed analysts’ projections.

The disappointing results again ignited concern of potential declining interest in the iPad line — Apple’s second-largest revenue generator, behind the iPhone. The tech giant said Tuesday it sold 13.3 million iPads in its fiscal third quarter, below both its year-ago results and Wall Street estimates. While Cook said iPad unit sales met internal projections, he acknowledged that there was soft demand.

On a conference call with analysts Tuesday, Cook blamed the weakness in select regions, including the US, and a reduction in channel inventory. Still, he remains optimistic about the iPad.

“We’re very bullish about the future of the tablet market, and we’re confident we can continue to bring innovation to this category through software, hardware, and services,” he said.

Apple likely has been hurt by a few factors that could continue to drag on iPad sales. When people upgrade their tablets, they often pass down their older devices to relatives or friends. Additionally, tablets don’t enjoy the same two-year upgrade cycle that smartphones have, since tablets aren’t typically subsidized by wireless carriers. Also, most people who want a tablet likely already have one. In the battle for new customers, Apple now faces stiff competition from dozens of new, inexpensive devices that run Google’s rival Android mobile operating system.

Cook said Tuesday the market for iPad is “very bifurcated,” with sales going “extremely well” in developing BRIC countries — Brazil, Russia, India and China. However in developed countries, such as the US, he said “the market is clearly weaker.”

He added that he sees a recent deal with IBM to create business-focused applications as a catalyst for iPad growth. The company also noted the iPad’s strength in airlines and education, with 13 million iPads sold to education customers globally. Apple has long pushed for education and enterprise to drive iPad demand and sales.

In addition, Cook said that more than half of the iPads are sold to someone buying a tablet for the first time.

“I honestly believe the opportunity is huge,” he said.

-Shara Tibken contributed to this report.

via cnet.com

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