Apple Inc. (NASDAQ:AAPL) iPad sales haven’t grown as steadily as iPhones at the same point in their life cycle, and some analysts think this is because the iPad is primarily used for entertainment and can easily be cut when budgets are tight, unlike the iPhone (used primarily for communication) or a computer (primarily for work). With more gadgets such as the rumored iWatch coming out in the next few years, Apple Inc. (NASDAQ:AAPL) will need to find important, unique niches to fill if it is going to sell them alongside its other products.
“The tablet is particularly good at entertainment. In a sense, the tablet’s real job is to reduce boredom as the top response to how a tablet makes consumers feel is “Never bored—technology provides me with many entertainment options,’ writes UBS analyst Steven Milunovich. “Content creation is the tablet’s Achilles heel. So far Apple appears okay with that but an alternative is to develop a convertible product aimed at a different job to be done.”
Apple TV development
Apple Inc. (NASDAQ:AAPL) hasn’t released any official information on the matter, but it seems that the company has delayed development of Apple TV in favor of the iWatch, which could come out as early as next year. If the change in priorities turns out to be true, it means that Apple agrees with Milunovich’s assessment and realizes it needs to create a new product category, as Apple TV competes fairly directly with the iPad.
UBS gives Apple Inc. (NASDAQ:AAPL) a 12 month price target of $540 compared to a current stock price of $520.32, citing a disappointing iPad sales trajectory, but Apple Inc. (NASDAQ:AAPL) has completely revamped two product categories (mp3 players and smartphones) and practically created a third, so you shouldn’t discount its ability to make the iWatch the must-buy gadget of the 2014, possibly embarrassing Google Glass in the process, which seems like a significant upside risk for the next year. Some people have wondered how much Steve Jobs’ absence will hold the company back, and while he certainly imprinted his personal style on Apple products, we won’t really know whether Apple Inc. (NASDAQ:AAPL) can create a sense of cool without him until they release something more than a product update.