Since its launch in 2010, Apple Inc.’s (NASDAQ:AAPL) iPad has never seen a major revamp like iPhones that offer different and unique features with each model. iPhone has always been one step away from grandeur; it has always gotten its advancements after they get introduced in iPhone. These incremental changes have resulted in iPad reporting dwindling growth year after year. This Thursday Apple will launch its latest version of its ipad but the excitement just isn’t there; especially when compared to the hype iPhone created.
Consumers usually exchange their old iPhone with new ones through dealers and wireless carriers; however the trend is entirely different in the category of iPad. When it comes to iPad users give their older version to friends, relatives or kids; therefore it just does not have the same cycle that keeps newer iPhones in demand. A testament to this fact is that there are still first generation iPads in use, which makes up 14% of the total iPad models in circulation currently.
Apple is leading the product category of tablets with its iPads, however its sales do not contribute much to the total revenue of the company, which should be expected from the product. The third quarter results showed that only 16% of the total revenue was generated through iPad sales. This was down by 2 percent from last year. The hope is that after the launch this Thursday, these numbers would reach the twenties, and if not then Apple has a dying product on its hand. Like the iPod which amounts to around 1% of total revenue.
Even after contracts with corporate America, the iPad hasn’t reported any strong numbers. IBM and Apple Inc. (NASDAQ:AAPL) agreed on a partnership two months ago where it was agreed that Apple devices with the iOS will be pushed into the corporate world at a faster pace. Most of the fortune 500 companies already use Apple devices; however this is not enough for the biggest company in America. It would have to depend heavily on emerging markets, business users and schools to product stellar numbers.
The buying cycle of the iPad is much longer than the iPhone, hence comparing iPad with iPhone isn’t really fair. An iPad is shared among different family members, whereas a smartphone is something which every individual has to purchase separately and because the upgrades offer drastic changes so iPhones get replaced with new ones faster. Larger screen iPhones will also cannibalize the market share of iPads because users won’t see the need for an iPad when their smartphone gives them the same functionality.
Users who like a single device to perform all functions also don’t purchase an iPad if they have a good smartphone. Surprisingly the same rule doesn’t apply to a MAC and the rising MAC sales prove this point. In its third fiscal quarter, 15% of sales came from MAC. Tablets haven’t replaced laptop computers; however smartphones have made the existence of tablets questionable. Apple is also said to have started the manufacturing of its 12.9 inch iPad pro, which is expected to attract many business users when it hits the market next year and hopefully will increase the market share of iPads.
