The Terrible Tablet Tantrum: Part 1

on May 31, 2014

Anger

In the first quarter of 2014, Apple sold 16.4 million iPads, a 16% drop compared to the number of units sold in the same quarter one year ago. Apple CEO, Tim Cook, explained the news away, but the tech press was having none of it.

Flat

HangingSales of iPad were flat. Sales were less than flat. Sales were depressed. Sales were depressing. Sales were awful. Sales were catastrophic. The Tablet world was about to come to an end! The iPad was hanging on by its finger tips!

You think I’m exaggerating, right? Employing hyperbole? I’ll let you be the judge. Here are some typical headlines and comments that have been written about Tablets generally and the iPad specifically over the past two weeks — many of them by some of the finest and most respected names in tech.

Headlines

Apple’s iPad Business Is Collapsing ~ Jim Edwards

Are the iPad’s go-go years over? ~ Jean-Louis Gassée

Contention: people are discovering that tablets are not really a thing, and that in general, the gap between phone and PC barely exists. ~ Peter Bright (@DrPizza)

Giving Up On The iPad ~ Jared Sinclair

Have we already reached peak iPad? ~ Brad Reed

I can’t find a way out of an uncomfortable conclusion. In order for the iPad to fulfill its supposed Post-PC destiny, it has to either become more like an iPhone or more like a Mac. But it can’t do either without losing its raison d’être. ~ Jared Sinclair

There is, however, a growing perception that the iPad growth could continue to stall. ~ Ryan Faas

Tablet demand hits a wall ~ Jon Fingas

I don’t think tablets will ever disappear, but for mass-market use, they’re going to keep getting squeezed from both sides: larger-screened phones and smaller, lighter laptops. The percentage of people whose primary computing device is a tablet may have already peaked.

Over the next few years, I suspect an increasing number of people will choose not to replace old tablets, instead just choosing to use their phones for everything… ~ Marco Arment

As battery life gets better and screen sizes grow, it’s likely tablets and smartphones will eventually just converge into one device that can be simply slipped into a pocket, instead of two devices that overlap each other in many areas. ~ Owen Williams

Young people are growing up on the mobile phone as their primary computing device, which has fundamentally changed the way they use and think about the internet. Tablets are simply unnecessary for them… ~ Dustin Curtis

I think the future of the iPad is for it to disappear, absorbed at the low end by iPhones with large displays and at the high end by Macs running a more iOS-like flavor of OS X. Perhaps it won’t disappear completely. After all, for certain niche uses – especially those listed above – the iPad is great because it’s neither a phone nor a PC. But these are still niche uses and can’t possibly sustain the long, bountiful future that many hope the iPad has. ~ Jared Sinclair

The iPad is dead. ~ Steve Kovach (@stevekovach)

The iPad is so over, even Apple seems to be moving on. ~ Galen Gruman (@MobileGalen)

The iPad may already be past its prime. ~ Brad Reed

While good at some of the things and pretty to look at, iPad (and other tablets) aren’t particularly useful. ~ Javed Anwer

Why Apple’s iPad Is in Big Trouble ~ Adam Levine-Weinberg

Young people don’t use tablets because they don’t see them as necessary ~ Owen Williams

Get Real

Whenever you find yourself on the side of the majority, it is time to pause and reflect. ~ Mark Twain

I cannot agree with the tablet doomsayers and I would respectfully suggest the facts don’t agree with them either.

1) PREMATURE: Talk about resting your entire argument on a thin reed. We’re talking about a single down quarter in a non-holiday period that has already been explained away as a glitch in the supply chain. Much of this speculation rests on a foundation so fragile a single robust quarter of sales will blow it into the dustbin of history.

2) AGE: The iPad is only four years old — FOUR YEARS — and has sold 210 million units.

3) PCs MANUFACTURED: If you count the iPad as a personal computer (and you should) Apple is, even excluding the Macintosh, the largest manufacturer of PCs in the world. For those of us who remember the days of Windows domination, that statement is absolutely mindblowing.

In 2013 alone Apple sold nearly as many iPad’s as they did Mac’s between the years 1991-2010. ~ Ben Bajarin (@BenBajarin)

4) STANDALONE BUSINESS: Based on the last 12 months of revenue, the iPad would be in the top 100 companies in the Fortune 500. ~ via MG Siegler

AppleIncome
CAPTION: The iPad is only 17% of Apple’s revenues, but if it were split off, it would be a Fortune 100 company.

5) REVENUE:

In 2006 — the year before the iPhone — Apple had revenue of 19.32 billion.

In 2009 — the year before the iPad — Apple had revenue of 36.54 billion.

In the first 90 days of 2014 — the quarter that generated all of the angst-filled headlines — the iPad generated revenue of approximately 11.5 billion.

In other words, using back-of-the-envelope calculations, it appears that last quarter’s disappointing iPad revenues were twice as large as the revenues generated by all of pre-iPhone Apple and larger than the revenues generated by all of pre-iPad Apple. Most companies would kill for such disappointing results.

6) NEW USERS: Tim Cook reported over two-thirds of people registering an iPad in the past six months were new to the iPad.

Let me repeat — over two-thirds of the people buying iPads are NEW to the form factor.

Sounds like the opposite of stagnation to me.

7) EDUCATION AND ENTERPRISE: The iPad has captured an overwhelming 91% of the Education market and 95% of the Enterprise purchases. And yet we think the sales of the iPad are going to stagnate? With kids being handed iPads in their schools? With adults being handed iPads at their place of work? Seriously? Am I the only one who thinks that conclusion runs counter to all the evidence and is completely bonkers?

St. Paul schools dumps Dell after one year; students to get iPads

8) ANECDOTAL: A middle school teacher recently caught a student with this:

BookPad

If you think a product that inspires kids to hollow out their books so they can sneak it INTO class is generating no interest amongst the young and is on the verge of extinction, then you are mad, I tell you, STARK RAVING MAD!

Psychotic Woman
CAPTION: Picture of the typical analyst, trying to kill the iPad.

Adoption

Tablet naysayers are totally ignoring the existence of the adoption cycle.

A) The adoption rate of tablets has been extraordinary.

— The iPad is selling at nearly twice the rate the iPhone did during the iPhone’s first four years.

— The install base of tablets worldwide is almost as much as the install base of desktops. ~ Ben Bajarin (@BenBajarin)

— It took the PC approximately 15 years to reach one billion units sold. It will likely take the tablet 5-6 yrs. ~ Ben Bajarin (@BenBajarin)

— On its current trajectory, the iPad, by itself, will soon eclipse the entire PC market in terms of sales. The broader tablet market, of course, already did that some time ago. (Remember, this was all done in only four years.)

slide-7-1024

B) Rapid Adoption is highly predictive.

Historically, products which become ‘mainstream’ or widely adopted follow an S-curve during that adoption. The curve is remarkably predictable given a limited set of points….We are fortunate that data also exists for Tablets. ~ Horace Dediu

s-curve-adoption

It is highly improbable that tablet penetration would rise from 0 to 42%, in a mere four years and then suddenly come to a screeching halt (more or less reversing itself). Such a claim is so out of keeping with historical norms the proof required to sustain it would have to be extraordinarily strong.

Exceptional claims demand exceptional evidence. ~ Christopher Hitchens

C) Some tablet naysayers claim the tablet market is saturated. I’ll let Mary Meeker respond to them:

We think tablets can be nearly pervasive but only six percent of people have one today. ~ Mary Meeker

Tomorrow

I may not agree with you, but I’ll defend to the death my right to tell you to shut up. ~ Andy Borowitz

Tomorrow, I take a deep dive into the two questions that seem to be perplexing Tablet naysayers the most:

— Is the Tablet good enough to replace the PC?
— Is the Smartphone good enough to replace the Tablet?

Turns out, the logic used to explain why the tablet deserved to be a category separate from the PC is also the very same logic that can be used to explain why the tablet will remain a separate category from the smartphone. Join me tomorrow and I’ll explain why. (INSIDER ARTICLE, Subscription Required.)