Tablet trade-in drop hints at low iPad Mini cannibalization rate
Contrary to past product launches, trade-in activity fell by 45% after Mini's debut
Computerworld - Tablet trade-in queries plummeted by 45% when Apple introduced its new iPad Mini, hinting that the smaller Apple device is not significantly cannibalizing sales of the larger tablet, an electronics recycling firm said today.
"The iPad Mini doesn't seem to be cannibalizing sales," said Bob Kilinski, the chief marketing officer of CExchange, an electronics trade-in company that handles programs from 40 brick-and-mortar retailers, mobile carriers and online sources in the U.S. Among its clients are eBay's Instant Sale, Wal-Mart and Radio Shack. "Post-launch, trade-in volume dropped 45% once customers saw what the [iPad Mini] was, in effect saying, 'I'm not trading for that.' "
In virtually every other Apple mobile device launch -- including new iPhones and iPads -- consumers have swamped trade-in vendors with queries for price quotes as they looked to swap their older hardware for the newest models.
That didn't happen with the iPad Mini, leading Kilinski to conclude that either consumers were adding the 7.9-in. tablet to their inventories or that they were new to the tablet market and so had nothing to trade.
Apple introduced the iPad Mini on Oct. 23, and started selling the tablet Nov. 2 in the U.S. and 33 other markets.
Apple also unveiled a fourth-generation iPad last month -- the one genuine surprise in a day of product announcements -- and that didn't seem to trigger trade-ins either, Kilinski said.
"It was too close on the heels of the last one," explained Kilinski, referring to the March debut of the first Retina-equipped 9.7-in. iPad.
Debate over iPad Mini cannibalization has been divided: Some analysts believe the smaller tablet's cannibalization rate will run between 10% and 20% -- in other words, one to two buyers out of every 10 who would have purchased the more expensive iPad will opt for the cheaper iPad Mini instead -- but a minority have predicted a much higher rate.
Sameer Singh of Tech-Thought, for example, came up with a cannibalization rate of 50% after pulling sales data from the recent Apple-Samsung patent infringement court case.
Cannibalization has serious implications for Apple's revenue, of course, as the more iPad Minis it sells as replacements for iPads, the lower its income, if not its profit.
But a recent survey by investment banking firm Cowen and Co. supported the iPad Mini's lower cannibalization rate. According to that survey, of the 12% who said that they planned on buying a Mini in the next year-and-a-half, 52% said they didn't own a tablet.
As reported by the 's AllThingsD blog, Cowen pegged the cannibalization rate at just under 5%, the percentage of those polled who said they would buy a Mini to replace an iPad.
"These are new people coming into the [tablet] market," said Kilinski of both the Cowen survey results and the decrease in trade-in activity around the launch of the iPad Mini.
Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is firstname.lastname@example.org.
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