Apple iPad: A Death In Four Charts

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Apple iPad: A Death In Four Charts

Apple Inc. (NASDAQ:AAPL) had a great quarter in the three months through June, but the company’s reliance on the iPhone during the period was palpable. iPad sales numbered a little over 13 million. The tablet computer is dead, according to early doomsayers, and it’s certainly a dead duck at Apple according to some. Here’s a look at why iPad sales are falling, and what’s actually going on in the tablet market.

Tablet sales are sluggish all over

IDC reckons that there was trouble in the entire tablet market in the second quarter of 2014, and that’s certainly hitting the Apple Inc. (NASDAQ:AAPL) iPad division. Their picture of the market is below.

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According to the research firm there was growth in the second quarter of this year, despite what other research has suggested, but it wasn’t all plain sailing. Tablet sales were lower in the second quarter than in the first quarter of the year, and Apple Inc. (NASDAQ:AAPL) units are visibly shifting downwards while an onimous “other” group takes hold of more share.

US Carriers killing iPad demand

Over at UBS, the feeling appears to be that Apple Inc. (NASDAQ:AAPL) is suffering from promotions set up by US wireless carriers in the tablet business. A chart accompanying the report showed exactly what the company meant:

US carriuer iPad

The analysts reckon that promotions that offer money off of an iPad on contract may harming sales of the Apple Inc. (NASDAQ:AAPL) slate. Mid range tablets are free on a wireless contract, but an up front payment is needed to secure an iPad.

Apple is no longer king of the tablet world

IDC has been following the fortunes of Apple Inc. (NASDAQ:AAPL) in the tablet world, and it seems that the iPad is no longer the undisputed king of the tablet world.

iPad market share

Market share in a monopoly is bound to decline given proper regulation, and that’s exactly what’s happened to Apple Inc. (NASDAQ:AAPL) iPad market share in recent years. The table market is now dominated by devices selling at half the price of the iPad, and they’re winning in total number of units sold. The gap is getting bigger, and Apple appears to be losing out each quarter, not only to overall market stagnation, but also to competition from Android computers.

The tablet doesn’t make categorical sense

Samsung can be accused of a lot of unscrupulous behavior when it comes to intellectual property, but Apple Inc. (NASDAQ:AAPL) certainly didn’t invent the phablet. The oversized smartphone design was popularized by Samsung, with its original Note, and it’s hurting Apple Inc. (NASDAQ:AAPL) and changing the way it designs phones. Business Insider provided the following chart:

Phablet salesSmartphones with screens five inches big, or those larger, are exploding and will likely overtake those with smaller screens very soon. The iPad doesn’t make sense to many people as a web browser if their phone has a six inch screen, and so the device is cast aside. The tablet has become something to play with, a device of pure consumption. It’s no wonder that Amazon is the leader in the market.

If you can’t beat them join them

Apple Inc. (NASDAQ:AAPL) isn’t about to abandon the tablet market, but the company is not using the iPad to shore up its losses in the area. September is set to bring with it a new, much larger, iPhone 6, and the company may recoup some of the iPad sales it lost to large smartphones.

As for the iPad itself, it seems that the future is not all that bright. The device is never going to reach the heights that investors hoped, and its growth possibilities are already dead in the water, though it will fill a niche going forward.

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8 COMMENTS

  1. I love the design of the Ipad, and how well built it is, but I hate Apple software. It sometimes drives me crazy and occasionally glitches or freezes. Is there a way to install Windows 8 on my Ipad?

  2. Declining sales does not mean the iPad is dead. Apple can still modify the iPad to bring sales back. As long as consumers are still using the older iPads, it proves the iPad is not dead. I could understand if they were abandoning them for some other device but that hasn’t been proven. I think in the next major upgrade cycle, iPad sales will rise again. In this world there are a lot of cheapskates who will certainly buy those no-name Android tablets but those consumers may not be using them much at all. If Apple starts pushing tablets for educational and health use, iPad sales will definitely increase. A slowing platform doesn’t mean that it’s dead. Some people were declaring desktops dead and they’re not. They just hit a slow sales bump for a while. These creeps from IDC (and Gartner) are nothing but freaking liars and charlatans and they need to be exposed for the BS artists they are.

  3. I think what we’re seeing is the first plateau of the tablet computer revolution. The early adopters have bought theirs and found that replacing them every 2 years is unnecessary. Unlike smartphones, where the carriers put our large subsidies, users have to pony up for their own upgrades.

    So the iPad IS dead, is it. No. Not at all. First, nobody else can sell tablets. The galaxy tab is doing worse than the iPad despite being GIVEN away with S5s. Yes, there are a bunch of $99 junk tablets that are out there that IDC counts as tablets, but the web share data tells the story…almost 90% of all tablet traffic comes from iPads. There is no question that iPad is plateauing at the moment, but so are all of Apple’s real competitors…Samsung, Microsoft, Amazon, etc.

    The next step in the iPad growth story will come with increased functionality. The iPad needs more that can be done with it. More tablet-native apps that increase work productivity (hello, IBM!). More apps that enhance usability (e.g. improved speech/gesture recognition).

    Oh, and honestly, using IDC data to cover tablet sales is just laughable. They invented millions of shipments of galaxy Tabs that were later shown to be sitting unsold in warehouses. They are shills for the companies that pay them, and skew market data to reflect negatively on those that don’t pay them (like Apple). So take everything they say with a very healthy dose of salt.

    tl;dr: Apple’s iPad is slowing but is still outselling all of their competitors by a wide margin. iPad sales will tick up with the IBM partnership, enhanced functionality.

  4. The iPad is actually larger than many household names such as McDonalds.

    Yes, if the iPad was all Apple did it would still be a significant large company.

  5. Never say never. Apple Mac sales popped in the quarter and the pop is a lot more profitable than iPad reduction year over year.

    The non-Apple iPads are overwhelmingly dominated by very cheap Android iPads that are probably clobbering Android high profit Tablets much more than Apple. (Sounds a bit like early days with iPhone).

    Therefore, things could change dramaticAlly as other forces operate in the market.

  6. Everyone who wanted a tablet has already bought one. Earlier analyst predictions of continuing annual increases in tablet sales at the expense of PCs and laptops were simply wrong. What we are now dealing with is a saturated, rapidly maturing market. Sales of tablets now are for upgrades and replacements. Considering this and the inevitable onslaught of competing devices from a multitude of manufacturers I think Apple is doing fine with 25% of the market and some 13 million units sold in the quarter.

  7. Tablets are squeezed between pocket sized, content capable phablets and reinvigorated, talk to me laptops with keyboards for productivity and all day batteries for 64 bit cool running chips. Tablets attacked a defect in laptops; now laptops are back. The business niche for iPads is where carrying a clipboard for interfacing with customers is also cool.

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