iPad seeing negative sales growth
For many quarters now, Apple's iPad line, first launched in 2010, has seen negative sales growth.
That's not to say that the iPad isn't a terrific device. It is, and I'm not the only one that thinks that. Just ask tech reviewers and millions of iPad users. iPad user satisfaction rates(%) are constantly in the high 90s.
So why are iPad sales in decline? Well, I think there are a couple of main factors at play here:
Longer Upgrade Cycles
People are generally happy with their iPads and don’t see the need to upgrade their iPad as often as they do their phones. I think the typical upgrade cycle for most people tend to stretch beyond 2 years. I still see tons of people carrying the iPad 2 around, and that was launched in early 2011. iPads tend to be very well built, last long and they are often able to support the latest software; case in point: iPad 2 can still run iOS 8.
Apple CEO Tim Cook had this to say about iPad upgrade cycles, "It's longer than an iPhone, probably between an iPhone and a PC. We haven't been in the business long enough to say that with certainty, but that's what we think."
Cannibalisation
The iPad is in a strange place right now. It is sitting right in between the MacBook Airs/new MacBook, and the iPhone 6 Plus. Tim Cook noted it himself when he said during the Q4 2014 earnings call:
"There are obvious cannibalisation things that are occurring. I'm sure that some people looked at the Mac and iPad and decided on a Mac. I don't have research to demonstrate that, but I'm sure that will be just by looking at the numbers and I am fine with that by the way."
He added, "I am sure some people will look at an iPad and an iPhone and decide just to get an iPhone and I''m fine with that as well. But over the long arc of time, my own judgement is that iPad has a great future, healthy individual 90-day clicks workout, I don't know. But I'm very bullish on where we can take iPad over time and so we're continuing to invest in the product pipeline."
Apple has always embraced self-cannibalisation. If you don't cannibalise your own products, someone else will. As an innovator, you can't fear cannibalisation. Apple knew the iPhone would cannibalise the iPod, yet it launched the iPhone anyway.
Having said that, the landscape has changed. The lines between the iPad and large-screen phones are blurring and the same is happening between the iPad and MacBooks, made even more so with the recent introduction of the new MacBook.
A different landscape
I feel the topic of cannibalisation should be discussed in tandem with that of a different landscape that Apple now faces, and for which it is partly responsible. These two factors are closely related.
Consider this: In 2010, when Apple introduced the iPad, iPhone and most phone displays were relatively small. Most laptops were bulky and cumbersome to carry around. The iPad had a stronger use case, or "iPad advantage" if you will, back then.
Now in 2015: iPhone and most phones have large displays, and MacBooks and Windows Ultrabooks are constantly getting thinner, lighter and more refined. As mentioned in my previous point: The lines between the iPad and devices of other form factors are blurring and there is obvious cannibalisation going on.
Carrier subsidies
This is a smaller factor to consider: Some people buy their tablets without a carrier plan, especially so for Wifi-only tablets. Without carrier subsidies, there is less incentive to upgrade, as the up-front cost of a tablet is higher.
Why the situation isn't as bad as it looks
Tim Cook appears to be pretty optimistic about the iPad's longer term prospects. "At some point it will stabilise," he said. "I'm not sure precisely when, but I'm pretty confident that it will... I believe the iPad is an extremely good business over the longer term."
Daring Fireball 's John Gruber pointed out that the iPad's cumulative shipments by months since launch is still, for now, doing better than the iPhone's. The iPad has seen much faster mass adoption than the iPhone since it's launch.
It's important to note that, for the first three months of 2015, Apple sold 12.6 million iPad units. That is still a huge business for Apple, just not as huge as the iPhone business. Any other company would kill to sell 12.6 million units of a single product line.
As John so eloquently put it, "I think the iPad is sort of like a young phenom in sports. It came on so fast, so strong, that many keen observers - including me - expected it to eclipse the iPhone. That isn't panning out. But I think we, collectively, are now judging the iPad's actual sales and success not for what they are but for what we expected they were going to be. It's a good, popular, much-used family of products that continues to sell really well. Not iPhone-well, but well. Being only the second-fastest selling product in Apple history, instead of the first, is nothing to sneeze at."
Like Cook, I think the iPad is here to stay. I have an iPad Air and I use it everyday. It's just better than my phone and MacBook Pro for certain tasks. Tasks like reading an ebook, comics, web browsing, games. Apps tailored for the iPad just makes that experience all the more better. It's just more accessible and compelling than my MacBook for certain tasks. A large part of it comes down to convenience, where you can just pick it up and dive right in, wherever you are. You can't really use a laptop while walking around, can you?
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| Steve Jobs introduced the iPad as the "in between" device that's "far better" at some key tasks |
Therefore, I can relax, kick back and lounge around anywhere I want with my iPad in hand, something I can't do with my MacBook Pro. The MacBook also isn't as ideal for reading ebooks, as I often place it on a desk, as I am sure most people do, and I have to bend over to read.
Similarly, the iPad's screen is much more enjoyable for prolonged reading sessions than my phone, since it's so much bigger. I don't want to read a graphic novel on my phone, the experience just isn't as good.
In Part 2, I will talk about how we should change the way we see the iPad and Apple's current product offerings.
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