The iPad is a laptop. So don’t expect a huge upgrade this week.
In four years, the iPad has gone from zero to a completely mature product, in a way that smartphones haven’t. When a friend of mine asked me if he should upgrade his iPad 3, my answer was, “if it’s broken.”
Where mobile technology moves forward in leaps and bounds every year, desktops and laptops don’t. Some of that is that they aren’t pushed by carriers’ upgrade cycles, but they’re also just more mature product categories with more expensive products. That means annual refresh cycles are a lot more incremental, as people are only expected to buy new laptops every three or four years. My MacBook at home is from 2008. (Sorry, Joel.) I’m having trouble feeling compelled to upgrade it because it isn’t broken.
So we’ll get a little bit of RAM. A better processor. Apple Pay. Laptop-style upgrades. Not the leaps and bounds we’re still seeing in phones.
The iPad has always been Apple’s low-cost laptop play. Apple has held the line at $999 for its cheapest MacBook model for ages, but that doesn’t mean the company gave up on the lower-cost market. With full-sized iPads ranging from $399 to $929 and a broad array of third-party accessories offering things like keyboards to anyone who wants them, Apple has a laptop replacement at all price points except the absolute lowest.
This Is Wall Street’s Problem
None of this is an actual problem for Apple. It’s a problem for Wall Street, and unfortunately, way too much of the way we look at product development is driven by stock analysts’ obsessions with growth, growth, growth.
The iPad market exploded from 2010-2013 as everyone who wanted a low-cost Apple laptop replacement picked one up. Then it slowed down. Now we’re on, probably, a 3-4 year iPad replacement cycle. Maybe it will be a little shorter than laptops. But the growth phase has ended.
Other tablet makers are finding some small success, but here in the U.S., the biggest threat to the iPad is actually iPhone 6 Plus sales cutting into the iPad mini. In July, Microsoft said it booked $409 million in Surface revenue that quarter. Good for them! Apple’s iPad revenue is more than ten times that. That shows that while Apple’s global tablet market share is plummeting, its position in high-end tablets stays solid.
Take a look at IDC’s tablet sales tracker. Where’s the growth? “Others.” What do those “others” make? Really cheap tablets, by and large. A lot of those tablets are just being used as video players. Apple’s one real competitor in the high-end tablet market, Samsung, finds its sales are also pretty flat.
Apple will sell millions of new iPads over the holidays – just not in the “growth market” quantities that Wall Street is obsessed with. The iPad is a useful, flexible and powerful device. But almost everyone in the U.S. who wants one, has one.
Want a high-end growth market? Let’s talk about the watch.
AUTHOR: SASCHA SEGAN,Lead Analyst,Mobile