Have Apple's iPads Peaked? - InformationWeek

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9/17/2014
01:04 PM
Michael Endler
Michael Endler
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Have Apple's iPads Peaked?

Many reviewers consider Apple's new iPhones to be essential upgrades. Now the company needs new iPads that inspire the same excitement.

 Apple's Next Chapter: 10 Key Issues
Apple's Next Chapter: 10 Key Issues
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Late Apple CEO Steve Jobs famously said, "If you don't cannibalize yourself, someone else will." That sentiment effectively sums up the company's attitude toward its new iPhones. With larger screens, the new devices have already established a blistering, record-setting pace during pre-sales.

But these gains could be offset by lower iPad numbers. After all, the iPhone 6 Plus is basically an iPad Mini mini, as some online commentators have called it, and it's hard to imagine Apple's foray into phablets won't deflate demand for at least its smaller tablet.

It's also hard to say how troubling Apple execs find this scenario. In the short term, CEO Tim Cook is probably happy to trade iPad Mini sales for those of new iPhones. If carrier subsidies are removed from the equation, Apple's smartphones are actually more expensive than its tablets. This indicates that each time someone decides to buy an iPhone 6 or 6 Plus instead of an iPad Mini, Apple earns more money.

[Will another gadget make you a better person? See Apple Watch: A Cure For Smartphone Addiction.]

But here's the "problem," such as it is: iPhones already drive a disproportionately huge amount of the company's revenue, and the company's revamped product lineup only increases this dependency. That's not necessarily a problem as long as iPhones remain the most popular single brand of smartphones -- but no empire lasts forever. Apple's critics have speculated for the last year that the company's iPhone reliance could be a long-term vulnerability, reasoning that if a competing phone significantly leapfrogs the iPhone in quality, Apple could suffer the kind of quick downfall that it imposed on Nokia and BlackBerry.

These might be excessively alarmist concerns. Few large tech companies have been as consistently and stupidly underestimated as Apple. During the recession, the company defied odds with explosive growth -- but that didn't stop analysts from declaring every few days that Apple's momentum wasn't sustainable. Six years later, Apple's still the most valuable brand in the world, still produces the most popular and lucrative family of mobile products, and still exerts more cultural sway than any of its peers. The company also typically brings in more revenue than Google and Microsoft combined.

Will the iPhone 6 Plus eat into iPad Mini sales?
Will the iPhone 6 Plus eat into iPad Mini sales?

Then again, iPad sales have begun to cool off. The tablets are Apple's second-largest source of revenue, and it's not clear if or how quickly the Apple Watch will achieve comparable mainstream success. Apple's tablets burst out of the gate even faster than iPhones did, so after such rapid growth, this slowdown might have been inevitable -- but it also reinforces that Apple might be too reliant on a single product. Cook has dismissed slower iPad sales as a short-term trend and promised that Apple can still take its tablets in new and interesting directions. Perhaps that's true. But Apple faces tougher conditions than ever before.

For one thing, tablet owners haven't upgraded their devices as often as smartphone users do. Two-year carrier contracts that encourage new phone sales contribute to this dynamic, as does the fact that smartphones, because we always carry them, are simply more intimate and relied-upon than other consumer electronics. Apple's most popular iPhone is the relatively modern iPhone 5, for example, with the 5s not far behind, and the 6 and 6 Plus poised to be even bigger. But its most widely used tablet is the aging iPad 2.

PC sales are also modestly bouncing back, following several years of speculation that tablets had killed off demand for conventional computers. Tablets are here to stay, but so is mouse-and-keyboard productivity. Most of us can't afford to upgrade PCs and tablets every couple years, so while we snap up new smartphones as soon as we can, we let larger-screened devices grow longer in tooth.

Apple also faces increased pressure from its tablet competitors. Android's market share is frankly overrated, given how much of it derives

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Michael Endler joined InformationWeek as an associate editor in 2012. He previously worked in talent representation in the entertainment industry, as a freelance copywriter and photojournalist, and as a teacher. Michael earned a BA in English from Stanford University in 2005 ... View Full Bio
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Michael Endler
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Michael Endler,
User Rank: Author
9/30/2014 | 11:38:48 PM
Re: iPads caught in a trap
@techocrati,

Maybe. If they release the alleged 12.9-inch iPad, they'll have to know a bunch of people will want to use it with a keyboard. Will Apple leave all that business to third parties, as it does now? Could Apple's mind change now that Microsoft, with its new Continuum feature for Windows 10, might have finally found a non-awkward way to do 2-in-1s? Apple's got a bunch of patents for 2-in-1 designs, many of which pre-date the Surface by quite some time. They've been thinking about it, but who knows when or if they'll act.
Alison_Diana
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Alison_Diana,
User Rank: Author
9/23/2014 | 5:19:17 PM
Re: iPads caught in a trap
Yes, when i go to conferences I increasingly see people with tablets but I much prefer typing on my heavier MacBook. And I actually prefer my Kindle for tablet-like tasks like reading or looking up a website. Despite owning an iPad and a Kindle, I use my Kindle Fire a lot more than the iPad, even though i have a keyboard for the iPad.
Michael Endler
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Michael Endler,
User Rank: Author
9/22/2014 | 3:59:47 PM
Re: iPads caught in a trap
@Chris,

I've seen smartphone covers that are supposed to limit the angle of view such that it's fine for the user but harder to see for onlookers. I haven't tried one, though. Not sure how satisfying this would be in practice for someone concerned about this. Anyone tried it?
ChrisMurphy
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ChrisMurphy,
User Rank: Author
9/22/2014 | 3:27:19 PM
Re: iPads caught in a trap
I mentioned to a friend about getting the large screen iPhone, and she said "no, then everyone can see my business." Bigger not always better. Her triple pack is PC-iPhone-Kindle, with the Kindle just for reading.
nomii
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nomii,
User Rank: Ninja
9/22/2014 | 2:57:27 PM
Re: iPads caught in a trap
@Pedro the heat is on in the tablet market which some time ago was seen in the laptop market. I think phablet is something to watch about as well. I believe that having a smart phone with a bit bigger screen will serve all purposes till the time we have some thing extra ordinary piece of equipment getting out attention.
nomii
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nomii,
User Rank: Ninja
9/22/2014 | 2:54:04 PM
Re: iPads caught in a trap
@Chris you might be right but I have people for whom the price is just perfect. I believe it is basically the nature of work they are intended to do. Many a time a much expensive thing cannot do which some thing of few bucks can deliver.
JosephM649
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JosephM649,
User Rank: Apprentice
9/19/2014 | 3:38:05 PM
Re: iPads caught in a trap
Apple has already been eclipsed by another company!  It's called Samsung and Android.  They've had the "new" iPhone features for several years, and as the Samsung commercial points out, the Galaxy Note 2 beats out an iPhone Plus because it includes a sylus! It's time Apple looked for another market - maybe buggy whips!
PedroGonzales
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PedroGonzales,
User Rank: Ninja
9/19/2014 | 9:47:06 AM
Re: iPads caught in a trap
Me too.  For work, I don't think a tablet can replace a laptop.  I'm hoping someday there will be a really light laptop.  Even better than the macbook air.  My laptop is really heavy, I try not to take it with me only if it's absolutely necessary.
hhendrickson274
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hhendrickson274,
User Rank: Apprentice
9/18/2014 | 2:39:21 PM
Possible alternative
One could make an argument that Apple is working on new MacBook Air with a 12" touch screen if you look at some of the rumours out of the supply chain regarding a potental 12" touch-screen.  That would make sense as it's in the middle of the current Air line-up and with the slow merger of the iOS and OS X platforms, I can see them doing some work to come up with a touch-enabled OS X as a dot release of 10.10 or 10.11.
ChrisMurphy
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ChrisMurphy,
User Rank: Author
9/18/2014 | 11:27:57 AM
Re: iPads caught in a trap
I'm not even sure about the detachable keyboard, @PedroGonzales, though I haven't used Surface and am open minded. My world depends on that workhorse laptop, so I want zero compromise on the laptop experience, esp the keyboard. TDB
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