Jul 232014

Apple announced its 3rd quarter earnings last night and despite posting the most aggressive earnings growth since 2012, your troll headlines center around the decline in iPad sales for the second consecutive quarter. I’m not going to say Apple wouldn’t want the 15 million unit sales every quarter, but the plateauing of the iPad is inevitable. The reasons are pretty straightforward.

Smartphone : Necessity :: Tablet : Luxury

For everything that’s great about iPads, they are still “tweener” devices, which is why a certain contingent of clueless tech pundits couldn’t see the need for them – until they started selling by the millions. Keeping in mind that iPhones and iPads are running the same OS, the primary difference between the 2 devices comes down to telephony and real estate. If people can only afford 2 devices, chances are those devices are going to be a desk/laptop and a smartphone. With the almost-certain announcement of a larger screen iPhone, the real estate delta shrinks even more and the iPad’s size becomes even less of a selling point. As the market for tablets continues to saturate, there are still tens of millions of people that need a smartphone, compared to the millions who want – but will never get – an iPad.

The iPad Isn’t Subsidized

Unlike the iPhone, which can be subsidized over the course of a 2 year contract, you pay for the full value of an iPad up front. Even though, according to Apple, only 25% of iPhone sales are subsidized (which is excellent long-term news), that’s still a significant number of people who were able to afford an iPhone they may not have been able to otherwise.

What Would Act 3 Even Look Like?

Looking at the history of the iPad’s evolution, there are 2 major milestones: one pioneered, the other conceded. The Retina Display elevated tablet displays to a new level, making everything else look 8-bit in comparison. With the iPad Mini, Apple took a cue from Android OEMs and admitted to the market that a 7” smaller tablet was worth a product entry. With the Retina Mini, Apple combined both these achievements into a truly remarkable product. Aside from Retina and Mini, everything else about the iPad was about thinner, lighter, and faster. I think the Retina Mini represents “peak iPad”. I really can’t imagine another major innovation within the iPad product line. Then again, Apple is the company that translates surprise and delight into billions of dollars; I’m just a dude raking in literally tens of AdSense pennies a year writing about them. If anyone can revolutionize the tablet – again – it will be Apple.

It may be that the iPad has peaked as a product, but I believe it still has several iterations of relevance left. Even though its market will always be smaller, and it may be shrinking, it will be formidable for at least the next 5 years. With features in iOS 8 and Yosemite like Continuity and Handoff, owners of Apple devices will gain several more compelling reasons to own an iPad. We’re still decidedly in a post-PC world, despite what some crank-yankers may try to tell you.

Oh – and Macs out-shipped PC this quarter. Again.

 Posted by at 10:05 pm
  • RSS
  • Twitter