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-6.57 Opinion: 6 years after its introduction, iPad remains a long play for Apple

Zac Hall

- 26 mins ago

@apollozac

iOS Devices Opinion Comments (2)

Six years ago today Steve Jobs introduced the iPad on stage in what was arguably one of the best product demos from Apple or any other tech company for that matter. The hype was tremendous but the demo was low key.

Jobs plainly explained why the iPad needed to exist and where Apple believed it fit between iPhones and Macs, then offered an almost hypnotizing demonstration of what using an iPad was like. Highlighting the intimacy of the tablet, Jobs demoed the iPad on stage while comfortably seated for a full 12 minutes. If you've never watched the demo or haven't seen it lately, queue it up and see for yourself how much it stands out from nearly every other product introduction.

Six years in, the iPad has matured from a single product to a whole product line with multiple screen sizes, price points, and even accessories specific to the tablet. iPad sales peaked two years ago, though, and that peak's clearly not temporary like many believe it is with the iPhone. Even with a whole new display size with the iPad Pro, Apple saw year-over-year declines with iPad sales last quarter.

So how exactly have iPad sales been changing over the years, what has Apple done to address the product category, and what opportunities remain for the tablet family?

Let's take a look at just how many iPads Apple sold during the holiday quarter: 16.1 million. That's three times as many Macs sold during the same quarter, but iPads have outsold Macs since their second quarter on the market. Looking at the same holiday quarter one year ago, Apple sold 21.4 million iPads. The holiday quarter before that? Peak iPad at 26 million.

Looking at iPad sales annually, the recent and steady decline is even clearer. 74.2 million iPads sold in 2013, 63.2 million iPads sold across 2014, and 49.4 million iPads sold last year during 2015.

CNBC's Jon Fortt shared this chart which visualizes iPad sales per quarter since Apple began selling the tablet.

The iPad has effectively spent the last third of its life as a product category on the decline no matter how you slice it. So what has Apple been dying to combat that?

In 2012, before we actually reached peak iPad, Apple debuted the smaller and more affordable iPad mini. The 7.9-inch tablet was better priced to take on mid-tier competition from Google and Amazon, but even smaller iPads are still premium so Apple has thus far relied on older generation hardware to meet even lower price points.

Then this past November, Apple released the larger iPad Pro with a 12.9-inch display that mammoths the now mid-size 9.7-inch iPad. As we saw in yesterday's earnings report, iPad sales dropped dramatically year over year despite a significantly different iPad being introduced in the middle of the quarter.

For competitive reasons, Apple doesn't break out how many of which model of iPad it sold, so it's possible the iPad Pro sold in high numbers but not enough to offset decline with the other iPads. It's also worth pointing out that Apple didn't introduce an updated 9.7-inch iPad, which is widely considered to be the default model, and instead focused on updating the iPad mini and introducing the iPad Pro. It sounds like there's a new iPad Air 3 not too far off to balance this out.

Apple is also targeting both the enterprise and education markets as major potential iPad customers.

For enterprise customers, Apple has grown its IBM partnership first established in mid-2014, which has resulted in over 100 MobileFirst apps for iOS, watchOS, and OS X. Apple sees businesses replacing outdated PCs as an opportunity to push iPads in mass, and it's using IBM to serve as its enterprise wing for software development and distribution.

In education, the iPad has been getting schooled by cheaper and more laptop-like Chromebooks. As we've seen with iOS 9.3, Apple is shifting its 1:1 approach in education to allow iPads to be shared between classrooms when one iPad per student isn't possible. Apple's also making progress in education with its upcoming Classroom application for teachers and managed Apple IDs that can be assigned by schools.

And on a broader level, we saw Apple demonstrate a renewed focus on the iPad with iOS 9, which introduced new multitasking features like Split View, Slide Over, and Picture in Picture. Many of these features require newer iPads to work, marking one of the first instances where Apple has necessarily used software as a reason to promote iPad hardware upgrades.

Lengthy upgrade cycles have certainly been a factor in declining iPad sales, and Apple readily admits that larger iPhones risk cannibalizing iPad sales. The idea is that it's better for Apple to do the cannibalization and not a competing company.

Revisiting Steve Jobs' original description for why the iPad should exist, I think the whole table has flipped and it's way more complicated than six years back. Jobs described that iPad's goal as being better than an iPhone and MacBook at web browsing, emailing, viewing photos, watching video, playing music and games, and reading ebooks.

In the age of the iPhone 6s Plus and 12-inch MacBook, it's increasingly difficult to assign any one of those tasks solely to the iPad. But iPads are totally replacing laptops for loads of people (and Mac sales aren't climbing either), the software is getting increasingly capable, and the form factor has made leaps in just six short years.

While it's true that I personally can't fully replace my workflow on my Mac with one on the iPad, it's easy to think that the last few holes in this will be filled over the next six years of iPad.

For some perspective, read Seth's day one impression of the original iPad six years ago when he wrote that "the iPad will be a success" while the masses were dismissing it as just a big iPod touch. Think about how far the iPad has come since then.

Despite that downward sales trend, I'm happy to see Apple move the iPad forward every year technologically and hope to see iOS 10 continue what iOS 9 started by dramatically expanding the software capabilities.

Six years is an eternity in the technology world, but it's just a blip on the radar in the grand scheme of things. With that in mind, iPad seems to be a long play for Apple — not to mention Tim Cook genuinely seems to prefer the iPad to the Mac, which doesn't hurt the iPad's long term outlook as long as he's in charge of the company.