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When Apple CEO Tim Cook discussed his company’s earnings July 22, he noted that iPad sales were lower than some analysts had expected. Cook also said he wasn’t worried about those numbers and, in fact, said sales were in line with Apple’s expectations.
But Cook’s statement that the company is happy with iPad sales hasn’t stopped a number of analysts from expressing alarm, seeking answers (usually in the wrong places) or suggesting that the end is near for the iPad. Clearly, a number of analysts don’t understand that the iPad isn’t an iPhone, and expecting similar sales numbers is lunacy.
In fact, the iPad is selling just fine, as Cook noted. So why the difference in sales between the iPhone and the iPad? The fact is that there are some major differences between the two seemingly similar devices that dictate how they’re used, by whom and under what circumstances.
The most obvious difference is that the iPad isn’t a phone. That means it’s being sold to people who have different needs than people who buy phones. That also means the iPad doesn’t have the heavy subsidies that phones have, which means the up-front cost for an iPhone is usually lower.
But the real difference is in how the devices are used. iPads are used to display information in a format where it can be read easily, where data entry is easier than it is on a small device such as a smartphone, and where the primary interface is the larger screen. The characteristics that make an iPad so attractive for reading ebooks, entering data, searching the Web or displaying presentations also make it less sensitive to the relentless upgrade cycle that Apple engages in.
I see these factors in the iPads I own. And from what I can tell, the pattern is similar for other owners. I bought a first-generation iPad about six months after it was introduced, primarily for use as an e-reader prior to a long trip. The fact that I could synchronize my music from iTunes and also watch videos made it very attractive. But all I needed was the WiFi version.
I didn’t bother with the iPad 2 because it wasn’t that different from the one I already had. When the third-generation iPad shipped, I got one for the Retina display and for the cellular communications. I didn’t get another iPad until the iPad Air came out and along with it support for T-Mobile’s free data.
Now, that’s a lot more iPads than most people buy. If I were actually using it in business as a device for note-taking and presentations, chances are I’d have stopped at the third-generation version, which is really just about as good as the iPad Air.
Why Apple Isn’t Worried About iPad Sales Numbers
The lighter weight really isn’t that important in an office environment. Meanwhile, I also have a Microsoft Surface tablet, which is vastly more useful for doing the work I get paid for, which is writing.
But the lack of a compelling reason to buy a new iPad is clear for most people. The way it seems most people use their tablets, the annual model changes just aren’t that important. What that means is that Apple doesn’t have the constant torrid stream of iPad sales that it does from iPhones because there’s really no reason for most people to buy a new one if they already have an iPad.
Complicating the iPad sales situation, from looking at the sales of cheap Android tablets, is that many people don’t need the horsepower of the new iPads either. The only things they want to do are to watch movies and perhaps read books. Pretty much any tablet can do those things. This helps explain why iPad has a comparatively small market share of just over a fourth of all tablets, according to some analysts.
But Apple does have some things going for it that other tablet vendors may lack. The most important is wide penetration into corporations. Apple’s biggest challenge there is that while its penetration is wide, it’s not deep. But that’s probably going to change once IBM’s partnership with Apple gets rolling, which will give large companies a way to buy and integrate the iPad into IT operations.
With the IBM deal, Apple stands to gain a great deal in depth as well as in breadth of its penetration into the enterprise. The only companies that really have a way to match that are enterprise suppliers such as Hewlett-Packard and Dell. Then, of course, there is Microsoft, which also just launched its new version of the Surface Pro 3, a tablet that’s aimed directly at enterprise IT departments.
The iPad is either replacing a laptop computer or it’s filling a niche that hasn’t previously existed. But either way, it’s not a product that people buy new every year because they don’t need to. For many uses, a first-generation iPad is as good as a new one.
But even when a newer iPad is a good idea, it usually doesn’t need to be the newest iPad, just one that does what the buyer needs to do. In effect, Apple created a device that does its job well enough that people are happy with what they have. It’s hard to complain about that, even if it does disappoint some analysts.