Apple's iPads: 4 Things To Watch In 2015 - InformationWeek

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12/29/2014
08:16 AM
Michael Endler
Michael Endler
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Apple's iPads: 4 Things To Watch In 2015

Apple's iPad sales slowed down in 2014, but the company can open new avenues for growth in 2015, especially among enterprise customers.

Top 10 Social Media Fails Of 2014
Top 10 Social Media Fails Of 2014
(Click image for larger view and slideshow.)

Only a year ago, Apple's iPad was still the darling of the tech industry. The fastest-selling product line in Apple's estimable history, iPads soared to meteoric heights as the PC market came crashing down, prompting more than a few tech commentators to predict tablets would obviate the need for PCs for most users. Throughout 2014, however, this iPad narrative changed.

After posting fantastic Q1 sales on the strength of its new iPad Air, Apple has suffered three consecutive quarters of falling tablet sales. Apple scored a few points this fall when it launched the iPad Air 2, with many reviewers hailing the device as the best tablet available. But even as pundits showered the device with praise, most admitted it was an incremental upgrade -- thinner and faster than its predecessor, with a Touch ID scanner and a nicer screen, but not a significant upgrade in terms of functionality.

The company's iPad Mini refresh was even more modest; Apple essentially stuck a Touch ID on last year's model, added a gold color option, and called it a day. Recently, Apple has actually earned more money from Macs than iPads, which is pretty amazing, given that not long ago iPads were characterized as PC killers. Apple's iPad business also sustained some PR bruises, notably the disintegration of its landmark iPad deal with LA Unified school district.

[Will Apple win big with its upcoming smartwarch? See Wearables In 2015: 4 Predictions.]

To be fair to Apple, the entire tablet market slowed this year -- from over 50% growth in 2013 to only around 7% growth in 2014, according to research firm IDC. Shoppers also snapped up around 68 million iPads, not quite as many as last year, but still a lofty number that no other single family of tablets can touch. The fact that Mac revenue meanwhile exceeded iPad revenue had at least as much to do with rising Mac sales as falling iPad marks. While 2014 might have been a slow year for iPads, it's hyperbole to predict that Apple's tablet line is doomed.

Indeed, Apple CEO Tim Cook has characterized the slowdown as a mere "speed bump," promising that iPad innovation hasn't yet peaked. Cook argues that because iPads hit the market only a few years ago, no one knows exactly what kind of upgrade cycle to expect. Many anticipated that iPad users would buy newer models every couple of years, just as many iPhone users do. But Web-tracking services continue to report substantial Internet traffic from older iPads, indicating that many users with two- or three-year-old devices are happy with the performance levels these older machines provide.

Cook could be right. If existing iPad users have been waiting to upgrade, and new customers have driven recent sales, millions of users might buy new models in coming months, making 2015 a blockbuster year for iPads. Iterative advances, such as the jump from the iPad Air to the iPad Air 2, don't look so iterative if the target audiences are people who've never owned an iPad and people with three- or four-year-old models.

Moreover, Apple execs likely knew that iPhone 6 Plus sales would cut into consumer demand for the iPad Mini. This explains why the newest Mini was such a slight improvement over its predecessor. If demand was already going to be depressed, why not save the big advances until Q1 or Q2 of 2015? Reports claim Apple postponed new products so it could dedicate more of its supply chain resources to meeting iPhone 6 demand. If true, this notion reinforces the idea that Apple could be holding back bigger iPad improvements while it seeks to maximize iPhone sales.

Then again, even if iPads are among the most polished and elegant tablets available, they're more expensive than many competitors -- and depending on one's use cases, the iPad's "superior" features might not matter. Want a tablet primarily for surfing the Web, posting to social media, and watching videos? Most any tablet with an IPS screen will capably handle the job.

With scores of cheap Windows and Android tablets available, iPads in some ways face the same challenges that have limited Mac sales over the years: If one prioritizes raw utility and cost, iPads might be hard to justify over cheaper competitors, just as many have found Macs difficult to justify over less expensive but similarly spec'd Windows PCs. But if one prioritizes hardware design and Apple's particular brand of user experience, iPads and Macs justify their relatively higher prices.

It's also worth noting that PC sales, though still far from their halcyon days, somewhat stabilized this year. With Windows XP reaching its end-of-service deadline, healthier PC sales aren't surprising. Some of those XP users may have replaced old machines with tablets, but, because mice and keyboards are still necessary for many types of work, millions of other XP users bought new PCs.

It's possible many people spent 2014 upgrading PCs and plan to spend 2015 upgrading tablets. But it's also possible that decent PC sales show the tablet craze has fallen back to earth -- that customers have realized

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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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