New iPads look to revive tablet market
Apple and Samsung need to give new reasons to upgrade
What will it take to turbo-charge the iPad market?
As spring approaches, some analysts expect Apple to spice up its iPad line, still No. 1 in the slate category but on the decline.
In late January, Apple CEO Tim Cook said he remained “very bullish” on iPad and hinted that “exciting things” were coming, within the timeframe of a 90-day clock.
The clock is winding down. Whether new iPads will be as exciting as Cook suggests is an open question. Refreshing the specs and adding features such as wireless charging would represent a good start, though no guarantee of a market boost.
Sales of Apple’s tablet dropped to 13.1 million units in the three months ended Dec. 31, compared to 16.1 million during the same stretch a year earlier. Year over year that translates into unit sales that fell 19% and revenues that plummeted 22%.
The entire tablet category has been in the doldrums lately. Strategy Analytics reported global tablet shipments were down 9% in the fourth quarter.
Apple still had the largest individual global market share in the fourth quarter, at 20.8%, Strategy Analytics data shows, but that compares to 23.2% a year earlier.
Runner-up Samsung, which recently introduced new tablets of its own at Mobile World Congress — the Android based Galaxy Tab S3 and the Windows 10-based Galaxy Book “2-in-1” — has a 12.9% share. Amazon, in third, registered 6.7%.
Collectively, “white box” vendors consisting mainly of cheap unbranded or rebranded traditional Android slates, as well as some Android and Windows 2in-1s, had the largest slice at 28.7%. Many such vendors were out of China.
In the U.S., the iPad still has an 85% share on tablets priced more than $200, according to NPD, and continues to top the overall retail market. A sizable advantage for Apple comes with the more than 1 million apps that have been designed specifically for iPad.
One problem Apple faces, however, is that for many consumers, there’s been no compelling reason to regularly upgrade. Yes, the most recent iPads are faster, lighter and boast better screens than their older counterparts, but predecessor models still get the job done, at least for basic stuff.
But some iPads are feeling their age. The original iPad, dating to when Steve Jobs unveiled it
on stage in 2010, can’t run iOS 10, the latest iteration of Apple’s mobile operating system. Same goes for the second-generation iPad, the third-generation iPad with a Retina display and the original iPad Mini.
Some other models are starting to feel sluggish, too, and they may be further impacted when Apple unleashes the next version of iOS at its Worldwide Developers Conference in June.
The good news for Apple is that people who have decided to get a tablet are still choosing iPads over rival slates. And iPads still make up the vast majority of tablet shipments in schools.
“I frequently fly and see many Samsung phone users with iPads. I almost never see any other tablet on a plane,” says Horace Dediu, an analyst at market analysis firm Asymco.com.
Even during the iPad’s heyday, potential buyers had to be persuaded that a tablet was worth getting instead of a conventional laptop computer. The decision is increasingly influenced by another factor: Smartphones with everlarger screens are encroaching on the space occupied by smaller tablets such as the iPad Mini.
The Pro was essentially Apple’s first pass at the 2-in-1 category epitomized by Microsoft Surface computers. Such machines have detachable (often optional) keyboards and thus serve as hybrids between tablets and laptops. Strategy Analytics senior analyst Eric Smith notes it took Microsoft three tries with Surface before it got it right.
“Price is a key barrier for highpowered 2-in-1s right now,” Smith says. “Consumers want them, especially as hard choices lie ahead as to which computing devices will be replaced.” The phone remains essential, he says, but the choice between tablet and PC poses a dilemma.
Asymco.com’s Dediu raises another key question: “How can Apple improve iOS, and developers write software, that makes the category more competitive with laptops?”
We’ll have to wait a few more months to find out.
“Price is a key barrier for highpowered 2-in-1s right now.” Strategy Analytics senior analyst Eric Smith