Tuesday, August 3, 2010

My $1,000 iPad Purchase Odyssey (And The Law Of Large Numbers Be Damned)

I'm taking time out tonight to share my iPad purchase story. My experiences in buying this device provide corroborating anecdotal evidence as to why I believe Apple will achieve $20 billion in revenue this quarter and blow away most revenue and eps estimates. 
My $1,000 iPad Purchase
At the end of that day I had made a $1,000 iPad purchase (accouterment and sales tax included). I spent $1,053.60 to be exact and $960 before CA sales tax was added. The pre-tax amount is a nice even number because Apple doesn't do the silly ninety nine cent thing on hardware devices. The purchase odyssey required an eighty five mile round-trip trek along the highways and byways of Southern California and visits to two extraordinarily busy Apple retail stores on a Sunday afternoon. 
I have nothing against Best Buy per se and certainly not when the store is located conveniently in my home city of Santa Clarita. On this Sunday afternoon the local store had the 64 GB Wi-Fi + 3G iPad in stock. It's not the model I wanted and I was determined to purchase the desired iPad accouterment at the same time. My list of accessories included the external keyboard, AppleCare, additional power cable and the Apple iPad case. I also wanted the 32 GB iPad and wasn't willing to fork over the additional $100 for the 64 GB model. Off to the Apple store in Glendale we go. 
Glendale Apple Store
My wife and I arrive at the Apple Store in Glendale about 3:30pm and the store is absolutely packed. Every digital device on display has someone tending to it and every store staff member is busy with at least one customer and another waiting impatiently for their attention. The store also has absolutely no iPads in stock. Being the resourceful person she is, my wife grabbed the first seat that became available by a Mac on display, took out her iPhone, Googled store numbers and started making calls. The Best Buy in Burbank had no iPads in stock, the Best Buy in Santa Clarita still had the 64 GB model available and the Sherman Oaks Apple Store had the 64 GB model in stock but only if we hurry. 
Not to leave the store empty handed and just in case the Best Buy in Santa Clarita was the only option remaining by the time we drove to Sherman Oaks, I bought all of the iPad accessories I wanted at the Glendale store. The accessories were easy to find. An available sales person to handle the sales was the challenge. Finally we get a staff person's attention. While processing the purchases he recommended we get on the waiting list for an iPad purchase at the store. Estimated wait time was three weeks. I reluctantly signed up as the purchase mode of last resort. We made a beeline for the Sherman Oaks Apple Store. By the time we made the 20 minute drive I had already received my confirmation email from Apple of my reservation at the store for the 32 GB iPad I wanted. I grumbled all the way to Sherman Oaks I didn't want to spend the extra $100 for the 64 GB model, but I had resigned myself to that fate if I wanted the iPad that day.

The Sherman Oaks Apple Store
Similar to the Glendale store, the Sherman Oaks store was packed. Not a single device on display was unattended. We did quickly find a store staff member and explained to him we were told 64 GB iPads were available. As he went to check, I mentioned to him I really wanted the 32 GB model just in case one was available. A few minutes later he comes out from the back of the store with a 32 GB iPad and two small, square boxes. He was intent on selling me MobileMe and AppleCare. I told him I had purchased AppleCare for the iPad in Glendale and had been a subscriber to MobileMe from its early days as a free service called iTools. He didn't want to relent. He said we could get a $30 discount on our MobileMe renewal. I told him my subscription renews in January and I was spending enough that day already. I told him the sales pitch was a good one. If it wasn't a hot day in July and wasn't so far from my January MobileMe renewal, I might have taken him up on the offer. 
Purchase Complete!
To complete the purchase we had walk back by the Genius Bar. I took out my iTunes Rewards Visa Card. The sales person was curious about the nondescript black card. I explained it's an iTunes card and I was getting 2% back on the purchase in iTunes dollars. He seemed bewildered. I told him after he swipes the card he'll have the option of sending me an email receipt and the address is already encoded. I told him I wanted an email receipt and a paper receipt for the bag before I walked out of the store. He smiled and obliged. 
I looked around and said to him and my wife, "Just look at this store. It's as busy as the Glendale store. No wonder Apple will report record revenue in eight days." Again, he looked bewildered and asked me if I was a stockbroker. By then two other store staff members were listening. I told him I wasn't a stockbroker but I follow Apple, publish revenue and earnings estimates for the company and believe it is and will remain the most amazing enterprise of our times. He smiled again. I think we both enjoyed the encounter.

We drove home. I cancelled the purchase reservation at the Glendale store and unpacked the iPad. That was three weeks ago and when at home I hardly ever put it down. It's the most immersive Apple device I've ever owned. 

All told I spent over a $1,000 at the Apple stores on that Sunday and about 25% of the iPad's purchase price on accessories and services. That's not including the $30 I immediately spent from home on the iPad versions of Pages, Numbers and Keynote. The Apple iPad is a revenue and earnings monster and these days the Apple retail stores are jammed with foot traffic. I reiterate my early 4th fiscal quarter revenue estimate of $20 billion and my share price forecast of $400 by early May 2011. The law of large numbers be damned.
Robert Paul Leitao 


  1. Great story. Not at all dissimilar to my iPad purchase odyssey here in No. Cal. Although instead of driving all over the Bay Area on a quest for the elusive 32 GB iPad that I wanted, I just waited the 3 weeks and picked it up when it arrived. Like you I pretty much don't put the damn thing down when I'm at home. And now that I've jailbroken my iPhone 3G and can make in a WiFi hotspot, I take the iPad with me whenever I'm out. ;-) Don't get me started on the intentional crippling of the iPhone's tethering ability. >:-(

  2. I love my iPad. But i wonder what would happen when a flood of Android tablets hit the market at a much lower pricepoints and with USB ports.

  3. I'm guessing you've made enough money on apple stock that a few iPad wouldn't make much of a dent.

    Can you tell me why you enjoy the iPad more than a laptop for doing things around the house?

  4. i'm about to sell my ipad...this thing is more of a frenzy. i don't see the ipad as all that useful. I keep on wanting to get things done faster and i can't do that on the ipad. It takes a long time to type anything.

  5. Great report. One thing I'll say is that I think it's very worthwhile to spend the extra 100 for the 64 gb version. I've ripped a good chunk of my DVD library to iPad and this indeed space. Not having to subset my music collection also requires space and I love never having to compromise. Two more reasons, I tend to resell my iPhones and iPods and I also seem to get most of the premium back when I later sell the device. The money I raise keeps me with the latest and greatest without spending much extra. If I chose to not sell, I still like the idea of having an older device that is chock full of media in a time where it is no longer fast enough to be upgraded to the latest os or to be the number one reading/gaming/browsing machine.

  6. @anonymous: it's an *assumption* that the market will be flooded with Android pads at a much lower price point. I'm not sure they can do it. Apple is leveraging efficiencies of scale, purchasing power, manufacturing efficiencies and other advantages in a way that few can match.

    As it is, netbooks already come in lower priced -- with USB ports -- and the iPad is taking a large divot out of their sales. Additionally, the early tablets are proving to be non-starters (JooJoo) or the anticipated pricing simply isn't price competitive (that Galaxy thingy I read about).

    USB ports will matter to some, but to the far larger market that would see the iPad more as an appliance, USB isn't much of a factor. For those of us acclimated to iPhones, the iPad is a similar device, and I can't recall a moment that lack of USB ever came up as an issue for me with either device. I have a laptop -- I'm not looking to replace it (it's a very sweet MBAir with SSD, btw...)

    The lack of a vibrant ecosystem of apps, media and established micro-pay backend services is a major hindrance to competitors. That's an edge Apple has that is functioning as that proverbial "moat" to entrance.

    The iPad is likely what the bulk of computing devices will be 10 years from now. For the moment, I expect I will still have a desktop and a laptop for a long time, although I have to admit that after using Sketchbook Pro on the iPad, a sliver of doubt has entered my mind about the indispensability of these form factors.

    That is to say, taking the longer view, I can't rule out that a touch-based tablet could supplant desktops for major applications in 10-15 yr time frame (imagine someone in 1985 extolling the virtues of a laptop as your primary machine -- you wouldn't have believed it then).

    I am struck with the iPad as with the iPhone that nearly all else is merely a "me too" thing. Sing the praises of Android and the latest smartphones if you like, but they are essentially all "me too" devices and features (I suppose you could say the same for iPods and GUI PCs, too). If the OEM or the provider attempts to avoid the "me too"-ness factor, they often have an un-compelling product. Those that want a compelling product travel deeply along the "me too" path. I expect the latter is what will work (if it does work for them.)

    The thing about the "me too" that we've seen is that Apple has showed the way time and again. I am still surprised that competitors can't simply match that. Some of it is entrenched interests, of course, and some of it is pride (if you can't innovate, try to differentiate by whatever means possible). Competitors predictably will attempt to differentiate themselves from Apple by supplying those features Apple has abandoned (USB, Flash, file system, cameras, etc.) I wouldn't call that innovation, but it is an attempt to differentiate.

    We can debate the success of Android. Outside of tech-boy fandom the Android satisfaction surveys lag iPhone significantly. We don't see it in the US, but where iPhones and Androids compete head-to-head on the same carriers, Android devices come up short in sales.

    I expect we'll see the same in iPad v Android tablets, too.