- Sales of the iPad have slowed down in the previous two quarters.
- The main concern moving forward is cannibalism from the coming iPhone 6.
- While we're sure that Apple will be fine as an investment, we're interested to see Apple's specific moves to help remedy the iPad.
By Scott Tzu (charts from Statista)
I've spent some time trying to think about what is going to impact the iPad as a fraction of Apple's (NASDAQ:AAPL) sales going forward. In trying to identify some of the variables in the future that can address the questions about the iPad on Seeking Alpha, I came up with a couple of queries, the answers to which will likely shape the future for the iPad.
As you can see, Apple's iPad market share as a percentage of global tablet shipments has been on the decline since 2012.
One of the focus points when Apple reports next is going to be iPad sales. This leads us to a couple of questions that we have with regard to the future of Apple's business.
When are IBM-collaborated Apple business apps going to be available?
We know that Office is now available for the iPad. Office was so well-received because it was predicted to bring another type of user into the iPad customer base - those who use Office for business on a daily basis.
This press release came out a couple of months ago, specifying that Apple was going to be creating a new suite of products in collaboration with IBM Corp. (NYSE:IBM) to try and boost its enterprise footprint.
The timeline to when Apple begins to release and implement these apps, we predict, is going to run hand in hand will potential increases in iPad purchases for businesses, widely considered the biggest untapped market for Apple's tablets.
So far, this deal has been all talk, no walk. We're actively waiting for the enterprise sales reps to hit the ground running and see what they can come up with. However, we're likely still talking a year out before we see any tangible results.
Why not start coupling the iPad with the Apple Wireless Keyboard?
One of the reasons that Microsoft's Surface has been successful is because it has blurred the lines between laptop and tablet. With the PC market looking anemic, this seemed to have been the prescription for success for the company. Apple's iPad has always leaned the other way and blurred the lines between tablet and phone.
Coupling the larger iPad with the Apple Wireless keyboard gives people the opportunity to not only set it up as a tablet, but also to set it up as a very portable PC workstation. It gives the impression that the tablet has been made specifically to be able to get office-style work done, again pushing more toward the group of customers where Apple has the most opportunity.
What's the line between the iPad mini and iPhone 6 going to look like?
The thought process here is that at some point, we're going to have two products that look extremely similar - compare this to the iPhone and the iPod touch. Basically, they're the same product, except one can make calls and one can't. Having two devices that are similar but for one option encourages cannibalism among the products.
Research coming in from Asia seems to show that larger-screen phones and tablets with cellphone capabilities are gaining traction. So, we're interested to see what is going to distinguish these two and whether or not Apple, which now allows you to make calls from your iMac, is going to eventually allow you to make calls from your iPad. We believe the more clearly defined the line between these two products, the better it's going to fare for the company.
The Peel's Feel:
We're very bullish on Apple as a company, but the iPad has put itself into a bit of a conundrum here. While we don't believe in the rumors of the iPad's demise, we do lend an ear to both bulls and bears on the case, as we believe them both to have good points.
While we're interested in seeing what kind of fruit the IBM partnership bears, it's going to be another year or so before we have tangible financial data to look at.
A move to make the iPad more like a Surface 3 might not be the answer, because then the tablet begins to infringe on MacBook Air sales. So, where's the middle ground?
We do think the iPad skepticism is overdone - with a bit of fear-mongering from the Apple bears. The data with regard to market share doesn't lie, however. Ignoring primary source evidence in data like this is an ignorant want for longs to assess their investment in this company.
Ultimately, the company itself is going to be fine. Heading into the end of the year, I'm going to continue to watch iPad metrics very closely, and will report on them accordingly.