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

  4 Responses to ““Peak iPad” Is Inevitable, So Dry Your Eyes”

  1. Don’t think we’ve reached the tipping point where if you’re faced between the choice of a laptop and a tablet, you select “tablet”.

    In the Enterprise, I still see more C-suits lugging a laptop around between meetings, s’posedly answering emails in the corridor, than I do see them tip-tapping away on an iPad+Company Logo’d Cover.

    But I think the tie-up with IBM is the “Beginning of the Beginning”. Once it happens in the Workplace, the laptop ceases to be a laptop and returns to be a PC that’s hooked upto a screen & a mouse.

    Then the status symbol that hauling a laptop into meetings (my Win8 is bigger & better than your Win7) is now currently, gets replaced with the status symbol “my iPad Pro craps on your Surface 3”.

    Here’s a Question for you. Why do all those peeps who enjoy the Phablet experience, not simply buy an iPad mini and make VOIP calls on it? Is it that they want the Carrier Subsidy or they don’t have the imagination or they jumped up clapping & singing “shiny big toy!” when the salesperson showed it to them in the store?

  2. I think you’re bang-on about the IBM partnership. The problem with getting iPads (and Macs, for that matter) into the enterprise has been cracking the IT inner sanctum. Letting Apple provide the hardware while leveraging IBM connections and enterprise software development experience allows each to do what they’re good at. I also think that – hard as it is to admit – Office for iPad is huge here as well. It removes yet another adoption obstacle. Maybe some version of the iPad is the future of enterprise computing and people just have to push beyond mouse vs. touch and their multi-window environment conventions (keyboards have already been dealt with).

    I get your point about VOIP and I’m hard-pressed to give you a reason why people don’t take this approach to ~7″ devices. Maybe it’s VOIP flakiness vs. cell connectivity – or maybe people really do feel stupid holding these things to their heads to make calls.

  3. Good analysis! The iPad mini is just about 8 inches, though (not 7), big enough to make a smaller form factor work with existing iPad software.

    I use my iPad about 2/3 of the time now. Love it.

  4. You are correct – it is about 8″. You can tell I’m still using an iPad 2. The Mini is my next acquisition – probably in its next iteration.

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