Apple was the first company to sell mass-market personal computers in 1984, the company reinvented portable music players in 2001 with the iPod, smartphones in 2007 with the iPhone, and tablets in 2010 with the iPad. Until last year Apple disclosed revenue generated from all those product categories however, this year the company didn’t share iPod sales figures. It’s clear that iPod does not account for significant part of Apple’s profits.
What happened to the iPod product category? iPod sales were cannibalized first by the iPod touch and then iPhone slowly cannibalized sales of the iPod touch. Apple has never been afraid of cannibalising the sales of its existing products. Apple’s late CEO Steve Jobs famously said, “If you don’t cannibalize yourself, someone else will.”
Is iPad facing the same fate as of the iPod? Will the iPad soon not be a major source of revenue for Apple? To understand these aspects let’s get into the details.
From iPad Air to iPad Air 2 – Not a major product update
If we look at the current trend of iPad sales we see some interesting figures; in Q1 2014 Apple sold 26 million tablets compare that to Q1 2015 the company sold 21.4 million. In 2013 Apple launched the new iPad Air and in 2014 the company launched iPad Air 2. Apple sold more iPad Air’s than iPad Air 2 during their respective holiday quarters.
One of the most obvious reasons that explains the fall in sales figures for iPad Air 2 could be due to the new tablet not being a major update when compared to its predecessor. iPad Air was a radical redesign and added many enhancements however, the iPad Air 2 received a modest update with improvements being camera, barometer, new processor with motion co-processor, and Touch-ID. These updates were certainly not enough for users who already own an iPad Air to upgrade.
Was iPad just a fad? Before we jump onto any conclusions we need to delve further into the tablet category.
Different Upgrade Cycles
Unlike iPhones customers are not looking to upgrade their tablets every two-years. Our smartphones have to endure much more rigorous use each day compared to the tablets. So even if you still own an iPad that was introduced in 2012 it may still be working just fine. I have an iPad 2, Retina Display MacBook Pro and iPhone 5. Even though the second-gen iPad now lags in performance after iOS 8 update I still don’t see the need to upgrade. One possible reason could also be that after purchasing the latest MacBook Pro I have increasingly felt lesser need to work on my iPad.
Users’ tablet upgrade cycle will largely depend on what you use the tablet for. If it’s just for browsing, emails, and watching movies then you’re probably not going to upgrade every two years. If you’re into gaming and love to play games on your iPad then upgrading every two years makes sense as Apple upgrades the tablets with much more capable graphic chips and all AAA game titles are quickly updated to take advantage of new features.
Smartphones have also become an expression of showing off the latest gadget you bought as one obviously tends to use it more often no matter where you are. Tablets would probably never reach that level of attention. You don’t upgrade your MacBook Air or MacBook Pro every year just because a new model was made available.
If we look at iPhone’s upgrade cycle where the company introduces major improvements every two years and follows up with minor improvements the following year it still continues to outperform previous years sales figures. iPad category certainly won’t give the same results. There’s still a lot of scope for the tablet however, its adoption into new markets and industries is dependent on factors other than just faster processor and better camera.
Another reason attributing to the decline in sales could be the introduction of large screen iPhones. Users who would previously carry an iPad mini and an iPhone can now carry just an iPhone 6 Plus. Apple has been always accused of not offering much choice to its customers however, now its a different story.
There’s a 7.9 inch iPad mini, 9.7 inch iPad, 4 inch iPhone 5S, 4.7 inch iPhone 6, and 5.5 inch iPhone 6 Plus. So, even though iPad sales in particular may have been affected, it could potentially be getting converted into iPhone sales.
With the new range of choices now available to customers it may take a couple of years for the sales figures to stabilise and adjust as customers make their choice for their preferred device for various computing purposes.
iPhone had a three years lead on the iPad. When the iPad was first introduced it was not until the iPad 2 that we started seeing a large number of companies creating apps for their employees. iPad’s growth depends a lot on the ecosystem of apps other than games and productivity category. As web developers, companies, educational institutions develop more and more content optimised for the tablet we will witness continuous rise in tablet sales. Apple made a great move to tackle this issue by partnering with IBM to create enterprise ready apps.
So, should Apple be worried about the state of the iPad? No! Apple should not be worried about lower iPad sales as it leads in market share and competitors aren’t making much progress in differentiating their products from the iPad. Microsoft is offering desktop computer experience on a tablet however, it doesn’t appear to be working favourably for the company. So, clearly if someone needs a tablet they are still looking at Apple.
The tablet market exploded after the introduction of the iPad. Apple’s competitors are waiting on Apple to take the next leap so that they can copy it.
As long as Apple continues to make improvements and make more capable tablets each year, this category is here to stay.