iPads: The Bad, The Good And The Takeaway

on October 19, 2014
Reading Time: 5 minutes

Tablets, in general, and iPads, in particular, seem to be getting a bad rap nowadays. So I thought I’d take a look at both the bad and the good, and see if that provided us with any meaningful takeaways.

1) The Bad

1.1) The Tablet Market is slowing.

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1.2) The iPad Market is slowing.

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1.3) The iPad rate of growth is plummeting.

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1.4) The iPad is losing share.

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1.5) The Doomsday articles are everywhere.

–The Diminished iPad, by Ben Thompson

–Apple’s New iPads Will Be A Hard Sell, by Marketwatch

–Apple, Needing A Jolt With New iPads, Plays It Safe Instead, by Cnet

–There’s No Reason To Think The iPad Is Coming Roaring Back To Life, by BusinessInsider

–Apple’s iPad Problem: Does Anyone Really Need an Expensive Tablet? by New York Times

— Apple’s iPad problem is a real one, by Dan Frommer

— Can Apple’s New iPads Reverse Its Sales Decline? by Chuck Jones

–Thoughts On iPad, by Sammy the Walrus

1.6) The Summary

Yikes! That’s a lot of doom and gloom. Yet I am oddly optimistic about the iPad’s future. How can this be?

2) The Good

2.1) Apple Is Bullish

We’re very bullish about the future of the tablet market and we’re confident that we can continue to bring significant innovation to this category through hardware, software and services.

You may dismiss Apple’s statement, above, as mere public relations puffery, but I do not. Apple has gone out of their way, on multiple occasions, to say that they think that the tablet has a strong future. I think that’s telling.

2.2) 225 million

Apple has sold 225 million iPads since its introduction in 2010. That’s more units sold in less time than any other device in Apple’s history.

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2.3) Tablets Are Outselling PCs

So, keep in mind that even though iPad sales growth may be slowing, it’s still beating the stuffing out of the traditional PC industry. —DM, Six Colors liveblog (@sixcolorsevent)

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2.4) Value

In the second quarter of 2014, the total worlwide tablet market was worth $14.4 billion. Apple’s sold 28% of the units and captured 48% of of the category’s value.

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If the iPad were its own company it would be larger than Facebook, Twitter, Yahoo, Groupon, and Tesla combined.

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2.5) Usage

The iPad DOMINATES usage. Apple has approximately 25% market share but 75% of all tablet usage.

2.6) E-Commerce

Even though the iPad is only four years old, it generates PC levels of e-commerce transactions.

Apple Pay in iPad apps will further drive its lead in ecoommerce. ~ Benedict Evans (@BenedictEvans)

2.7) 675,000 Custom Designed Apps

No competitor has anything even remotely comparable to Apple’s library of tablet specific apps. The iPad is an App machine. Most other tablets — and especially those selling for under $100 — are used as remote televisions.

iPad sales are driven by apps – Android Tablets by SD cards? ~ Benedict Evans (@BenedictEvans)

2.8) Institutional Sales: Enterprise, Education and Government

Tablets in the commercial segment experienced a 33% YoY growth in the second quarter of 2014… ~ Francisco Jeronimo (@fjeronimo)

We can debate whether or not iPad sales have plateaued in consumer markets, but they are definitiely growing in the Enterprise.

We think our partnership with IBM, providing a new generation of mobile enterprise applications, designed with iPad’s legendary ease of use and backed by IBM’s cloud services and data analytics will be one such catalyst for future iPad growth. ~ Tim Cook

In part because of apps, in part because of security, it part because of privacy, Apple dominates institutional sales. Further, Apple’s advantages in these markets are inherent. Everyone likes cheap, but cheap can’t compete if it doesn’t meet certain minimum requirements. Apple is the only provider of tablets that doesn’t make their money by selling their owner’s information.

You can’t trust dogs to watch your food. ~ Proverb

TouchID will only make iPads even more inviting to businesses.

TouchID very important in enterprise for mobile workforces, particularly in customer service scenarios ~ @charlesarthur

2.9) Apple Owns The Premium Market

Apple is selling nearly every premium tablet on the planet.

2.10) Competition

Honestly? There isn’t any. The smaller tablets are being sold as TV replacements. Apple’s tablets are the only App machines available.

Benedict Evans of Andreessen Horowitz has attempted to analyze Android tablet usage and found that most seem to last about a year before disappearing somewhere. Apple isn’t fearing cheap tablets, whether they’re from Amazon, HP or a brand in Asia you’ve likely never heard of.

2.11) Fifty-Percent New

Our own data indicates that more than half of customers purchasing an iPad are buying their very first iPad. ~ Tim Cook>

We naturally focus on sales growth. Perhaps we should also be keeping one eye out for the iPad’s ability to expand the iOS base. Year after year after year, the iPad brings in new users — many of whom are experiencing iOS for the very first time. And studies have shown that once those users enter Apple’s ecosystem, they are very unlikely to ever want to leave.

Sales growth is important. Growth of the iOS base is even more important.

2.12) Kids

iPads now the top consumer brand among kids 6-12. Kids love iPads more than Hershey’s, Oreos, M&M’s, Doritos Cheetos, Skittles, Disney, YouTube and Xbox.

AUTHOR’s NOTE: I originally included a graphic at this point, but it was in reference to all tablets, not just iPads. I included it for context, but some felt it was misleading, so I’m removed it.

2.13) Seniors

Seniors LOVE the iPad.

(P)arents and grandparents love iPad as it’s the first computer that is truly easy for them to use. ~ aaplorchard.tumblr.com

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2.14) Customer Satisfaction

The customer satisfaction numbers for all Apple tablets is sky high. But customer satisfaction numbers for the iPad mini with retina screen is an unbelievable 100%.

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ONE HUNDRED PERCENT! Stop and think about that for a second. How is that even possible?

3) The Takeaway

3.1) The iPad is expanding Apple’s iOS base.

3.2) Six billion in revenue ain’t nothing to sneeze at.

3.3) The iPad utterly dominates usage, e-commerce, premium sales and institutional sales (Enterprise, Education, and Government).

3.4) If you divide tablets into those that do apps and those that do other (mostly video and readers) the iPad has no competition. None. It stands alone.And no one is mounting a threat. With it’s 675,000 iPad specific apps and touchID, it’s lead is only going to get larger.

I know people will debate me on this but I still think a case can be made there is still not a Tablet market but an iPad market.~ Ben Bajarin (@BenBajarin)

3.5) When I look at the iPad, my biggest takeaway is always how much people love them. Not like. LOVE.

Kids love iPads. Seniors adore them. Come to think of it, if the iPad retina mini has 100% satisfaction, then EVERBODY WHO OWNS ONE — whether they be kids, teens, adults or seniors — is satisfied with it.

When I hear people criticizing the iPad, I can’t help but think that they are completely overlooking how much people really, really, really, really like their iPads. For many — perhpas for most — it’s the first computer that they understand and it’s the first computer that they WANT to use, instead of HAVE to use.

3.6) I think the iPad is doing the job that Apple wants done. It’s taking the top part of the market. It’s expanding the user base. It’s increasing user satisfaction. It stands between the phone and the notebook and works seamlessly with each of those products. It makes the “Apple World” ecosystem a better place to be.

The refresh cycle for the iPad may be much, much longer than that of phones…but it’s not infinite. One day a whole lot of iPad users are going to want to upgrade their tablets to Apple’s latest and greatest device. And that day may be coming sooner than we think.

But I don’t think that’s what matters most to Apple. While others strive to gain high market share (and low profit share), Apple seeks to create products that are loved. With the iPad, Apple has come closest to achieving that ideal.