As the new iPad goes on sale in Apple’s 10 priority markets, the excitement around the world is palpable. Not because this people can’t wait to be in line for the first tablet featuring something called Retina Display, but because of something far more important.
Lurking among many features of the new device announced by Tim Cook two weeks ago was a golden nugget for this market: the previous version, the iPad 2, would remain in production, and its price would immediately be cut by $100. Two days later, the impact of this price cut became clear. In South Africa it meant a R1000 price drop, to R3999 for the entry-level model. That’s the equivalent, at the time, of a $130 price cut.
That is huge news for one simple reason: the new iPad is not a dramatic evolution over the old one, unless a dazzlingly sharp screen is a priority for the buyer. At under R4 000, the iPad 2 becomes possibly the best value for money not only in the tablet market, but also across notebooks, netbooks and PCs, for those who only use these devices to consume material.
That will translate, in the coming year, into even more rapid uptake of tablets in South Africa. Already, this market has defied expectations.
The following data is based on information provided by a range of retailers, distributors, mobile networks and, yes, banks.
By the end of February 2012, 325 000 tablet computers had been sold to South Africans. Note, these were not all sold IN South Africa, as the tablet market kicked off in 2010 entirely as a grey market. That means they were purchased from sources that were not authorized resellers or distributors in South Africa.
The number of “grey” purchases would be an indication of the huge appetite and demand for tablets after Apple pulled the trigger on the market in April 2010. The total sold, until January 2011: around 20 000.
On a global scale, that is small. But considering the hoops customers had to jump through to get to those devices, it is a huge number. It was that number that finally convinced Apple to supply the iPad officially to South Africa at the end of January 2011, and to include this country in the second tier of countries that was supplied with the iPad 2 just a few weeks after the top tier markets received it in April 2011.
The arrival of the iPad and the early supply of the iPad 2 killed off the grey market overnight. The low cost relative to international pricing — it was cheaper in South Africa than in the United Kingdom, for example — also meant few would wait for a traveling friend or relative to bring one home. That makes the local market not only healthier, but also more measurable.
So does the iPad still own the market? How many tablets of other brand have been sold? Who is the biggest tablet seller in the market?
That last one is really a specific question about the impact of First National Bank (FNB), which has become the most high profile single outlet for iPads in South Africa, thanks to highly effective marketing. Is it South Africa’s biggest iPad outlet?
The answer is “no”. It may well have been the case during the last quarter of 2011, when a third of all iPads sold in South Africa in that period were sold by FNB, but that was a temporary trend.
FNB had sold 35 000 iPads by the end of February 2012. Traditional retail outlets had sold around 75 000. The various iStores dotted across the country have probably accounted for a similar number.
The total number of iPads sold to South Africans comes to about 205 000 by the end of February.
That sure sounds like market domination, but other brands have made a major impact since they became more widely available halfway through 2011. The mobile networks have pushed hard to persuade customers to buy tablets on contract, and they have been far more successful than most observers realise. Bearing in mind that most iPads sold in South Africa are Wi-Fi only, a low proportion of these will be active on mobile networks.
MTN, for example, has around 100 000 tablets active on its network. Of these, only about 40 000 are iPads – including most of those sold by FNB, with MTN data bundles added on. The other 60 000 are rival brands.
Assuming that Cell C and 8.ta tablet sales have not yet made an impact on the market, and that Vodacom has at least as many non-iPads on their network, that makes for a market of 120 000 tablets other than those made by Apple.
The totals then are 205 000 iPads, and 120 000 other tablets, giving Apple 63% of the South African market – practically the same as it has in the rest of the world.
This is good news for rival brands, indicating that Apple’s market dominance is not unassailable.
But it is also good news for Apple, as it underlines the fact that, despite dozens of rival brands, it still holds almost two thirds of the market. In terms of maintaining this market share, a far cheaper iPad 2 will probably be as effective as an early arrival of the new iPad.
* Follow or argue with Arthur Goldstuck’s statistics updates on Twitter on @art2gee