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Where are iPads going? Apple must consider what will happen next with them

Ondrej Holzman
45

Yesterday announced financial results Apple has made various headlines over the past quarter. The Californian firm generated the most revenue in its history, sold the most iPhones, and also did well in watches and computers. However, one segment continues to gasp for breath in vain – iPads have fallen for the third year in a row, so logically the most question marks hang over them.

The numbers speak for themselves: in the first fiscal quarter of 2017, Apple sold 13,1 million iPads for $5,5 billion. It sold 16 million tablets a year ago during the usually strongest three holiday months, 21 million a year earlier and 26 million a year earlier. Within three years, the number of iPads sold in the holiday quarter was cut in half.

The first iPad was introduced by Steve Jobs seven years ago. The product aimed at the free space between computers and phones, which at first nobody believed much, experienced a meteoric rise and reached its peak just three years ago. The latest iPad numbers are certainly not good, but the main problem is that Apple's tablet succeeded very well too quickly.

Apple would definitely be happy if the iPads became the second iPhones, whose sales continue to grow even after ten years and represent for Tim Cook and co. almost three quarters of all income, but the reality is different. The market for tablets is completely different from that of smartphones, it is closer to computers, and in recent years the situation in the entire market has also changed, where phones, tablets and computers compete with each other.

Q1_2017ipad

iPads are under pressure from all sides

Tim Cook likes and often talks about the iPad as the future of computers, or computing technology. Apple portrays iPads as machines that should sooner or later replace computers. Steve Jobs already talked about something similar seven years ago. For him, the iPad represented above all a form of how computer technology could reach an even larger mass of people, because it would be completely sufficient for most people and much easier to operate than computers.

However, Jobs presented the first iPad at a time when there was a 3,5-inch iPhone and a 13-inch MacBook Air, so a 10-inch tablet really seemed like a logical addition to the menu. Now we are seven years later, iPads are being pushed "from below" by the large iPhone Plus and "from above" by the ever more compact MacBook. In addition, iPads also eventually grew to three diagonals, so the difference visible at first glance was erased.

It is becoming increasingly difficult for Apple tablets to find a place in the market, and although they continue to be sold 2,5 times more than Macs, the trend outlined above has certainly not yet begun to replace computers in a big way. According to Cook, although demand for iPads continues to be very strong among people who are buying their first tablet, Apple must first solve the fact that many existing owners often have no reason to replace models that are several years old.

macbook and ipad

The iPad will last for many years

It is the replacement cycle, which represents the time when a user replaces an existing product with a new one, that makes iPads much closer to Macs than iPhones. Related to this is the aforementioned fact that iPads peaked three years ago. Since then, a huge percentage of users had no reason to buy a new iPad at all.

Users usually change iPhones (also due to obligations with operators) after two years, some even earlier, but with iPads we can easily observe double or higher deadlines. “Customers trade in their toys when they are old and slow. But even old iPads aren't old and slow yet. It's a testament to the longevity of the products," he remarked analyst Ben Bajarin.

Many customers who wanted an iPad bought an Apple tablet just a few years ago, and there was no reason to change from the 4th generation iPads, older models of the Air or Mini, because they are still more than enough for what they need. Apple tried to reach a new segment of customers with iPad Pros, but in the total volume it is still a marginal group against the so-called mainstream, which is symbolized especially by the iPad Air 2 and all its predecessors.

Proof of this is the fact that the average price for which iPads were sold decreased in the last quarter. This means that people mainly bought cheaper and older machines. The average selling price rose slightly last year after the introduction of the significantly more expensive 9,7-inch iPad Pro, but its growth did not last.

Where now?

Complementing the series with "professional" and larger iPad Pros was certainly an interesting solution. Users and developers alike are still exploring how to effectively use the Apple Pencil, and the potential of the Smart Connector, which is exclusive to the iPad Pro, has yet to be fully developed. Either way, the iPad Pro won't save the entire series by themselves. Apple has to deal primarily with the middle class of iPads, represented by the iPad Air 2.

This can also be one of the problems. Apple has been selling the iPad Air 2 unchanged since the fall of 2014. Since then, it has focused more or less only on iPad Pros, and so it has practically not even given customers the opportunity to switch to a new, improved machine for a few years.

For most users, it makes no sense to switch to the more expensive iPad Pro, because they simply won't use their functions, and their iPad Air and even older ones serve more than well. For Apple, the biggest challenge now is to bring an iPad that can appeal to the masses, so that it can't just be about little things like increasing the storage like last year.

Therefore, in recent months there has been talk of Apple preparing a completely new form of "mainstream" iPad, the logical successor to the iPad Air 2, which should bring a roughly 10,5-inch display with minimal bezels. This kind of change should probably be the beginning of Apple getting existing customers to buy a new machine. Although the iPad has come a long way from the first generation to the second Air, it is not that fundamentally different at first glance, and the Air 2 is already so good that even a slight improvement of the internals will not work.

Of course, it's not just about looks, but it's clear that it's often the driving force behind replacing the old with the new. Next, it will be up to Apple how it envisions the future of its tablets. If it really wants to compete more with computers, it should probably focus a lot more on iOS and features specifically for iPads. There is often criticism that iPhones get most of the news and the iPad lacks, even though there is huge room for improvement or moving the operating system.

“We have exciting things in store for iPad. I'm still very optimistic about where we can take this product ... so I see a lot of good things and hope for better results," Apple CEO Tim Cook tried to reassure investors in a conference call about bright tomorrows. Otherwise, he could not say too many positive things about iPads.

As for the most talked about last quarter, Apple is said to have underestimated the interest and because of problems with one of the suppliers, it was unable to sell as many iPads as it could have. Additionally, due to insufficient inventories, Cook does not expect the situation to improve significantly in the coming quarter. That's why he spoke outside of the current quarters to convey something positive, so we can only expect when the new iPads will arrive.

In the past, Apple presented new tablets in the spring and fall, and according to the latest reports, both variants are in play. However, sooner or later, this year could be quite crucial for iPads. Apple needs to rekindle interest and attract new users or force existing ones to switch.

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