iPad Pro Will Stop Decline in Apple's iPad Sales - Maybe

The larger display of Apple's new iPad Pro invites new ways of doing things, new markets, new iOS capabilities and new kinds of apps. Will that be enough to reverse the decline in sales of the iPad line? No one knows for sure, but my hunch is that the sales decline of the product line will be halted. However, I don't expect a major turnaround.

First things first. Sales of the iPad line have been decreasing, in general, for the last seven quarters in a row.

iPad sales (millions) last 8 quarters. Spikes are holiday quarters Q1-14 and Q1-15.

But then, the global tablet market growth rate is also decreasing

Global rate of increase (green) & decrase (red) of tablet sales
Image credit: Business Insider

The reasons for this have been examined in great detail. Essentially, early customers infused themselves with an exciting new product, then found that there was no need to upgrade more often than every few years. Whether that's due to the inability of the technology to grow as fast as the smartphone, the psychology of having a new smartphone to show off every year or Apple's desire to keep iOS fairly common across platforms, shackling the iPad, are all factors that have been discussed.

In any case, the number one priority of Apple for its iPad product line is to put a stop to the quarterly decline in sales. I believe the iPad Pro alone can do that, but not much more. And that's not a bad thing at all. Once sales are stabilized, Apple has a basis on which to move forward with new technology, features and products. However, to suggest that the iPad Pro alone will suddenly breathe fabulous new life into the product line and ignite sales on a strong upward trend is, I believe, overly optimistic.

From what I've seen recently, other observers have come t the same conclusion.

Industry Consensus

Strategy Analytics predicts that the there is opportunity for all tablet makers in 2015-2016. Part of that optimism is based on larget tablets, like the iPad Pro which could reverse a global four percent decline and produce seven percent growth. Apple can probably be expected to benefit the most.

KGI Securities analyst Ming-Chi Kuo in a note to investors said, "the worst is over for iPad." Part of the assessment is a (perhaps) unwarranted optimism about Microsoft and its business oriented Surface Pro 4. Note that in the last reporting quarter Microsoft sold less than a million Surface tablets. Even Apple sold almost 10 million. And yet, the feeling is that the maturity of the modern large tablet for business productivity will float the boat of both companies.

iPad Pro ships soon. Image credit: Apple

Product refresh cycles also come into play. Apple customers who have an iPad 2,3, or 4, will start to feel the aging of their products as iOS 9 and 10 place ever increasing CPU demand on their older tablets. (In my own case, I can clearly see my old original iPad mini buckling under the weight of iOS 9.)

Finally, we have the rumor that Apple has, in a conservative approach, ordered just 2.5 million units to last through the end of the year. That's certainly enough, in concert with other effects, to stem the decline and provide an upward trend in sales. Assumptions would be:

  • The iPad Pro moves off the shelves at a good rate.
  • Customers are eager to upgrade to the iPad Air and iPad mini lines during the coming holiday period.
  • Sales after the holiday can be maintained by the (rumored) iPad Air 3 and the remaining iPad Pros from the first manufacturing run.

Final Words

The iPad Pro, by its very name, is not going to be a mass market consumer device. It'll be too awkward in size and/or too expensive for many. Accordingly, I don't expect it to sell out in preorders (if Apple does that), and I don't expect any lines at Apple stores on launch day. "Report Says iPad Pro Launching on Nov 11."

However, as part of Apple broad spectrum approach to iPad sales, I think the iPad Pro is an essential element to counter the energy Microsoft is putting into the Surface line. Those other strategic efforts and partnerships combined with continued, imaginative developments in iOS and new mobile technologies should put the iPad back on the path to growth.

But just by a little for now.