Underneath the Spin on Apple’s iPad Sales Lurks a Genuine Puzzle

Yes, Apple’s iPad sales are up year over year for the second fiscal quarter. But there’s much more to the story.

iPad Pro 2017 Product Line
iPad Pro Family is awesome. But not replacing Macs.

There’s an emerging problem with the iPad that’s hard to assess. Every quarter, there’s a bit of good iPad news, and during every Apple Earnings Report, Tim Cook points to it.

For example, comparing Q2 2018 to Q2 2017, iPad unit sales were up 2% and revenue was up 6%. That sounds good in isolation. But a notable problem is this: the unit sales were 9.113 million and 8.922 millon respectively. Looking at Q2, 2016 and Q2 2015, the unit sales were 10.25 million and 12.6 million. So, from 2015 to 2018, Q2 unit sales were down about 27%.

So this year’s small year over year gain doesn’t mean much.

Long Term Trend

The following chart shows iPad sales since the beginning, 2010. After a slight general decline starting in 2014, unit sales seem to have stabilized somewhat.

iPad sales for each quarter since launch in millions.
iPad sales for each quarter since launch in millions.

That’s good in one sense, but raises the question. Why aren’t the sales numbers returning to growth? Apple has, since 2015:

  1. Introduced an excellent 12.9-inch iPad Pro
  2. Introduced an excellent 10.5-inch iPad Pro
  3. Introduced a lower cost 9.7-inch iPad for education

These initiatives have served only to stem the decline.

One factor that’s been discussed is that as iPhone screen sizes grow, customers find iPads less and less compelling financially. That’s probably why the iPad mini is a dying product. Another factor may be that iPads last a long time. The need to replace an iPad isn’t as urgent as a new iPhone, especially one like the iPhone X. There’s no “boastful-look-at-me-factor” with an iPad.

Another positive aspect is that, because iPads are so durable, the installed base of iPads is likely growing. My (Numbers) spreadsheet says that Apple has sold 404 million iPads to date. I’d bet that over 300 million are still in use. Like the Mac, as the population grows, the product obtains a more compelling market status.

And yet. And yet. I am always troubled by the unspectacular growth from year to year, in the long run. In 2016, Tim Cook said,

The iPad is the clearest expression of our vision of the future of personal computing.

In fact, it turns out that the iPhone may hold that distinction, given its contribution to Apple’s overall revenue. That was US$38 billion in 2018 Q2 compared to 4.1 billion for the iPad. That’s a factor of over 9.

Larger, exotic iPhones will kill the iPad mini.

I suppose it’s both pleasing to Apple that the installed base is probably increasing and the long-term decline in unit sales has been halted. On the other hand, Apple makes significantly more money from far fewer Macs sold. Anyone who thought the iPad would eventually replace the Mac thinks so no more.

One might surmise that some kind of fundamental change is coming. Disruptive change will include: Bigger and bigger iPhone displays. The demise of the iPad mini. The ability, in 2019, to run iOS apps on a Mac, most notably MacBooks. The handwriting is on the wall. The iPad isn’t going to obliterate the Mac (or PCs), and it may end up being a niche, special purpose product that lingers on, waiting for something to radically change its status quo.

And that’s just fine, for now, in the sense that the basic triad of iPhone, iPad and Mac are in a prospering ecosystem of interoperable tools and generating handsome revenues. But change is coming.

11 thoughts on “Underneath the Spin on Apple’s iPad Sales Lurks a Genuine Puzzle

  • Having been in the market for a few years now and going through several iterations, I think what the iPad clearly demonstrates is that for large-screen computing tasks, the keyboard remains an indispensable interface for most people. A large-screen computer just isn’t as useful or practical without it.

    Let’s face it, in any society that is advanced enough as to generate the volume of cognitive and semantic information that we do, text (i.e. written language) is still the most efficient method of storing, transferring, and retrieving this information. And for languages that use alphabets or syllabaries (I can’t speak for ideogramic languages) nothing beats the physical keyboard for inputting this information. No, not voice interface –try dictating a term paper or business plan into your computer.

    That’s why I think Apple’s insistence on basing its push into the education market on the iPad is an ill-conceived idea. Yes, yes you can get an auxiliary keyboard but the iPad platform is not optimized for it.

  • John:

    I think another reason for the current growth trend is that many, if not most, iPad owners use their iPads primarily for consumption rather than as productivity tools. With that use case, people like my wife see no compelling reason to upgrade to a ‘more capable’ device when her current iPad retina plays video and other content just fine, most of which she listens to with headphones anyway, so quad speakers are a non-issue.

    My iPad Pro 10.5” is now a primary productivity tool, especially when travelling, but also around the office when I attend meetings. Particularly since the release of iOS 11, my productivity use case has ballooned. I recently assisted a host country file an application for vaccine to quell an outbreak, and did it solely on my iPad Pro, which required working across multiple formats graphic and text, creating embedded citations, attachments while accessing materials, including my own files, online and from Dropbox, and running simultaneous video conferences; oh yes, and signing PDFs. One of my colleagues expressed disapproval of my not using a ‘real computer’ for such important work, and was only mollified when he got the draft document, and also discovered that his ‘real computer’ could not get online when my ‘not real computer’ could do so in every venue with ease. In fact, having that cellular capability has proven to be a game changer when online access is mission-critical in the field. My MBP simply cannot go there.

    For me, the iPad Pro is the one device that I will now regularly upgrade, even more so than my MBP, for its productivity capabilities. I don’t know if a critical mass of the current iPad Pro installed base uses, or will use in near term, the iPad Pro line as a productivity tool, and if so, will tap its greater potential. So long as its primary use is in content consumption, the refresh rate will likely remain low.

    Many thanks for pointing out the correct term, ’installed base’. I have found myself slipping into the usage of its corruption, as it has become more prevalent. I’m making a mental note to resist that slide.

  • I’ve got an iPad 1, and use it daily for various tasks, mostly reading books.

    Looks like time to finally replace it with a new one, but selection is both slightly tricky, and a low priority for now. Learning the basics of Swift would probably be near the top of the list of things that would be nice to do.

    Work-ish stuff, meanwhile gets done with one or more of the following: 2009 iMac, a couple different 2013 MBPs (13″ and 15″), and an iPhone SE. Replacing/upgrading any of them is, again, a low-priority item; they just keep on doing what I need getting done.

  • I haven’t had an iPhone for three years now, just an iPad. I’m hoping that Apple will eventually link the watch to the iPad. It seems silly to me to use such a small screen for productive work.

  • I have the following Apple products:

    2 Macs (iMac and MacBook Pro)
    1 iPhone
    1 iPad
    1 AirPods
    0 Apple Watch

    I haven’t worn a watch since the last millennium and nothing about the Apple Watch – yet – has changed that.

    Of the Apple devices I have if I was forced to give up one the choice would be a no-brainer … the iPad. I guess my iPhone is most important to me, followed very closely by my MBP. I absolutely love my AirPods, but I could go back to wired headphones if I had to. And my iPad is nice … but totally unnecessary.

    And John, you’re spot on about the longevity of them. I had an iPad 2 for 6 years and only replaced it last August (tax free weekend!) with the base model 9.7″ iPad.

    Old UNIX Guy

  • I see iPhone and iPad (and Apple Watch, on the micro side) as the same product line. As universal sim becomes more prevalent, and 5G becomes the data standard, the communication differences (already minor) will disappear, although different sizes will undoubtedly still have different capabilities. I really like my Apple Watch (3, w SIM) although sadly I cannot use the cellular capability in Italy (a country where 12GB per month costs $12/m).

  • I have to confess – I’m a small screen man. I love the iPhone SE. I have an iPad mini and an 11-inch MacBook Air. Their portability is tremendous. (On my office desk is an iMac, – the house media server is a G5!)
    I use the MB Air and the iPhone most. The iPad mini is so convenient and iOS apps do so many things that Mac OS apps just don’t do. Add in the seamless iCloud integration that couple all the devices (most of the time) and there’s a tool for every occasion.

    No-one has yet invented the equivalent of the Swiss Army Knife. So one size does not fit all.
    But if there was one I had to give up (one less tool in the box) – it would be the iPad.
    I will buy a new phone and a new computer – but I probably won’t buy another iPad.

    PS – other family members take a different view – they collect Apple products like I used to collect postage stamps!

    1. I have to admit I feel the way you do an have always wanted even smaller screens than the SE, however my eyeballs rapidly have moved me in a different direction in the last few years.

      Even with my failing close vision, I am still tempted to get my dick tracy watch instead of a phone next time.

  • We have 3 iPads now in our house.
    I like the bigger screen compared to the 5 phones we have.
    Phones are great, but much of what we do with iPads really makes a larger screen shine.

    The iPad Pros are great for the kids to do their art with.
    Minecraft Better Together edition is great on the bigger screens.
    Games in general.

    iPads are better for content consumption and the iPad pros are much much better for artistic creation.

  • The iPad Pro (and I guess the new iPad too now) is great for handwritten notes. What percentage of people do that these days? I like using my own shorthand and drawing things in the margin or arranging the words in groupings relative to each other. I can’t do that as easily when typing, though I do have a decent system of bulleted lists. I also like the iPad for drawing, though I’m not much of an artist.

    When I look at scifi shows like StarTrek I see multiple iPad-like screen devices laying around. Right now they are too expensive to have several of them per person. But in the long run I think that’s where they need to go. If I want to study something, I may need a book open *and* my notes, plus perhaps a browser with several tabs. That is at least two iPads and possibly three. I can’t afford that. But over time I might collect enough older iPads to use for the extra screens.

    (We have three. One is the original retina iPad which is so slow I don’t like to use it. It is my toddler’s Daniel Tiger / Doc McStuffins TV device. One is my iPad Pro 9.8″, and the other is the iPad I finally convinced my wife to get for herself instead of using the slow iPad Retina. I had an iPad Mini which I gave to my sister when I bought the iPad Pro. I haven’t dared try to hog all the iPads at once yet. Basically everyone has their own personal device.)

    It is also possible that AR might become commonplace before iPads become cheap enough to have several per person. If AR is able to project multiple virtual screens around me then I don’t need multiple iPads anymore, just the one as a touch-sensitive surface for note taking.

    TL;DR: Two points (1) iPad is great for handwriting, but how many people do that; (2) will multiple iPads per user be a growth area for Apple or will the cost not come down enough for people to do that?

  • 1) Thank you, John, for using “installed base” rather than the awful phrase “install base” which seems to have infested the web.

    2) I am a huge fan of the iPad, but I agree that it faces stiff competition on multiple fronts: capable and powerful large-screen iPhones that run many of the same apps; cheap Android tablets for games and streaming; cheap touchscreen Windows-based laptops for general computing; high-quality Apple laptops (though none with touchscreens) for general computing; Chromebooks in education; and (as you note) a large installed base of devices that still work.

    I’m still not sure how Apple can compete effectively against Chromebooks. They are dirt cheap/disposable, reasonably locked down, marginal for games, good for typing up school work, and perfectly integrated with Google’s ecosystem of Google Docs/Drive/Gmail/etc..

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