Why Apple is Letting iPad Sales Drift Downward

3 minute read
| Editorial

Apple has watched the iPad sales numbers drift downward since 2013. Apple has smart executives. The only conclusion John can draw is that in 2013 and again in 2015 Apple embarked on an aggressive, multi-phase program to breathe new life into the iPad. It’s just taking some engineering time, and so during each quarterly Earnings Report, CEO Tim Cook just has to roll with the punches until it’s done.

iPad Pro & pencil

The 12.9-inch iPad Pro and Pencil. Not enough oomph.

Oh, Please

First, I want to comment on what Apple CFO Luca Maestri said, at about the 20 minute mark in the May 2nd Earnings Report. Commenting on the (dismal) 8.9 million iPad sales in Q2, Mr. Maestri said,

Turning to iPad, we sold 8.9 million units which was ahead of our expectations, despite supply constraints throughout the quarter.

I have several bones to pick about that comment before I proceed.

1. Apple executives likely have a very good feel for how many iPads will be sold, especially in the non-holiday quarters. Reports from the online store, the Apple retail stores and other retailers worldwide likely allow a very good estimate of end-of-quarter results. So, to say that iPad sales exceeded expectations seems less than candid. Are we to believe expectations were poor and then something amazing happened? Are we to get all giggly over the dismal number of 8.9 million?

2. Apple has been making iPads since 2010. But lately, executives Cook and Maestri have lately been providing the excuse that the company could sell more iPads if only supplies weren’t constrained. How can such a breakdown in the supply chain happen under Tim Cook’s watch seven years into the product’s existence? Are we to feel sorry that supply constraints sabotaged potentially huge sales?

Enough of that.

iPad sales numbers to date.

iPad sales, in millions of units, since launch.

A Brighter Future

I now think there’s a reason Mr. Cook and Mr. Maestri are biting the bullet during the earnings reports. There’s something they don’t want to give away. In fact, may suit them to put a false hype on the iPad and leave it at that. After all, Tim Cook could have said, “We’re working feverishly behind the scenes to fix this dismal, declining sales situation.” Given the lack of success of the iPad Pro to solve the sales problem, astute analysts (and the competition) might conclude that something new (and exciting) is afoot. Bad idea. Shows their hand.

Allow me to backtrack a little. I recall that Apple’s introduction of the 12.9-inch iPad Pro in November 2015 and the 9.7-inch iPad Pro in March of 2016 were intended to stem the negative growth in overall iPad sales. The embrace by the enterprise and the iBM partnership was likely seen as a healthy boost that would overcome the now evident longer upgrade cycles for the iPad in the general population. This effort may have been conceived, as I mentioned above, in 2013 or early 2014. However, since Q1 2016, iPad sales have continued to decline. Even the two intervening holiday quarters showed a decline. (See the chart above.)

With that original plan not working, I strongly suspect that there’s second plan, Phase II, also designed to get iPads back on a growth path. I don’t know what it is, but I’m going to speculate that the Microsoft Surface Studio, launched in October 2016, is influencing Apple.

iPad & Influence

Here’s my theory. If the iPad is going to grow again, it has to outright replace the Mac. So long as the Mac remains revered and viable for power users, the iPad will always be seen as an underpowered, not-very-expandable poor cousin. Sure the iPad can and does do great things for artists, writers, business people, students, and those in exodus from their PCs. But until the iPad can replace a Mac and plant its stake in the future, it’s going to be damaged by long upgrade cycles, slowly developing technology, and inherent security constraints.

Tim Cook has said, “The iPad is the clearest expression of our vision of the future of personal computing.” To make sure that vision flourishes, something dramatic has to happen.

One example I’ve mentioned is a new member of the iPad family. A 27-inch iPad that, via some kind of Rosetta-like technology, can run macOS apps. This solution would probably please 80 percent of Apple’s customer base. (Of course, Apple would continue to sell Mac Pros to the power users.)

Microsoft Surface Studio

MSFT Surface Studio has some problems. What if Apple did its own version the right way?

The Best Surprise is an Apple Surprise

Or Apple’s Phase II plan could be something else, entirely unexpected. Several things are certain, however. Apple hasn’t updated the 12.9-inch iPad Pro in 18 months. We didn’t get a refresh of the 9.7-inch iPad Pro this spring. Instead, there was the warmed-over 5th generation iPad in March, a product geared towards the education market. The competition is briskly sizing up Apple’s lapses and building competitive products. And so, this gap in time has the earmarks of a design rethink and reset.

Something Big is brewing. I sense it. Maybe iOS 11 at WWDC next month will provide a clue. Or it may not happen until iOS 12.

No executives have been sacked at Apple for a negative iPad sales rate that tends toward zero sales in about 2021. CEO Tim Cook and his team are smart and impatient people. I”m betting we’re in for a big and pleasant surprise soon.

7 Comments Add a comment

  1. MacFrogger

    I dunno John, I dunno…

    A lot of this article seems like wishful thinking on your part. I can certainly see Apple coming out with a MS Studio-sized device, but that is likely to appeal to a very limited number of people. Certainly not enough to restore the number of units sold to the glory of years past.

    I see something different in the quarterly sales figures. The Q1 spike in sales (the holiday period) is becoming less pronounced every year, while for the other three Qs in the year sales appear to flat-lining/converging towards 9-10M units/Q. At 40M iPads/year with Apple’s margins, that’s not a bad business.

    Sure, someday the “magical” scenario you envision could happen, but I think its years away at best. Just my opinion here of course, and I’ll add that I hope you’re right and I turn out to be wrong.

  2. mrmwebmax

    +

    I think part of the iPad so called problem is that expectations for it have always been aligned with those of the iPhone. Using myself as an example, I always upgrade my iPhone to the newest model through AT&T Next. That’s my one tech indulgence, and I admit it’s not exactly a necessity. It’s not like I ever had an iPhone that didn’t get the job done, but hey, there’s this AT&T program that makes it easy to upgrade so I do it. My iPhone practica,lily never leaves my hand or person anyway so I go for it.

    I consider my iPad in many ways like my Mac. Does it get the job done? Yes. My first gen iPad Air is being used right now for this response, and it remains my favorite content consumption device. Thee is absolutely no need to upgrade. Zero, zip, none. I’m still getting by on a 2008 iMac for web development and graphic design, and that’s how I earn my living! Like Macs, iPads are just built extremely well so upgrade cycles are not going to be anywhere near those of the iPhone.

    Unless Apple starts building crap that falls apart after a year, which it thank goodness will never do, it and we all just have to realize that upgrade cycles for any product except the iPhone will never equal the iPhone. Expectations should be adjusted accordingly. Apple just makes great stuff that lasts, period.

  3. Hammer

    From perspective, heavy-lifting computing will always require the Mac. From a content creator’s point of view, I would rather you stick hot pokers in my eyes than to be forced into doing my daily job with only the iPad. Like millions of others, each day I dock my MBP to 2 27″ monitors both at the enterprise desk and at my home office and could not imagine trying to produce the content on a small screen iPad, Pro or not. If Tim Cook really had to do what those like me do each day, he would have a different opinion about his vision for the future. For millions of, the world would not be worse off if iPad disappeared, as long as Apple continued developing the Mac OS and hardware to run it. And by the way, I truly believe Apple is dead-wrong about touch screen computers. So much so that it is my opinion that if they don’t offer a Mac variant offering that capability it could be one of the worst decisions in the history of business. Remember Blackberry’s then-CEO who made the statement, “…our research shows people don’t want to type on glass…? How did that go?

  4. Paul Goodwin

    IMO, if you try to make anything universal, it will automatically be too expensive, too heavy, too complex, and will not perform each of its intended strengths optimally. The iPad is an almost perfect browser/email/music & video control device. Trying to make it more than it is mistake (IMO).

    The iPad has a fairly expensive for an initial investment for a goodly portion of the market. It’s not that expensive when you consider how long they last. My 2012 iPad 2 lasted 4 years, and the only reason I got a new one is that memory and speed restrictions of the design wouldn’t support the now bloated apps and the overly complex web pages these days. It still works fine. But buyers that can’t afford the up front cost won’t care if it’s a great buy for a 4+ year device, they just know they can’t afford it. So the population of people who can afford one, want one and think they’re a good buy at this price is probably nearing saturation. Plus many of that population already have one that isn’t obsolete.

    I think these reasons are why the sales are lagging. The units out there that were sold in 2013 near the sales peak of Q114, are just now becoming obsolete. Given the pattern of decreasing sales numbers every year after Qtr 1 will likely repeat his year. It’s possible that the peak in Q118 will be higher than Q117 because more iPads will become obsolete then that did this past January. I think the curve will tend to flatten to account for a comstant rate of obsolescence.

  5. Paul Goodwin

    Not sure a giant iPad is a great idea. It’s pretty easy to put my iPad down and walk over to my Mac to do the heavier stuff when needed. I’d almost bet a paycheck that a 27″ iPad would cost 1.5x the combined cost of an iMac plus an ipad or a MacBook plus an iPad (pro or otherwise).

  6. shameermulji

    I used to think Apple was aiming to position the iPad to eventually replace the Mac but recently I’m not so sure. Two things have brought me to this conclusion:

    1. The PR / interview sessions Phil Schiller held regarding the State of the Mac Pro
    2. Tim Cook mentioned during Tuesday’s conference call that Apple was investing aggressively in the Mac line -up.

    So there definitely is going to be a place for the Mac & the iPad. Question is in what form?

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