Apple announced their earnings report for the first quarter of the year 2014 last Wednesday. Overall they were pretty much in line with the Wall Street expectations and the analysts’ predictions except for one stat that caught everyone’s eye- the iPad sales were down year-over-year from around 19 million in the same quarter last year to close to 16 million this year. For a device that had proven to be extremely successful for Apple and has shown tremendous growth over the past few years since it launched in 2010, this dip in sales is a cause for worry.
On the investors’ call, Tim Cook was questioned about this. He gave a pretty much non-answer by blaming an issue in the supply chain, as he had done previously on many other occasions. But the problem seems to be much deeper here. A 15.8% drop in sales is not something Apple can ignore. So what could be the problem? Before you say it is because of the rise of Android tablets, here is a graph representing web share of tablets. The iPad is clearly a leader in the tablet market, at least right now. Most Android tablets sold are sub-$100 in cost and naturally don’t give the user a pleasant computing experience. So no, Android tablets are not the reason for the declining iPad sales. They just are not fighting the same battles the iPad is.
Benedict Evans called out an interesting point which intrigued me. He said that the falling tablet sales aren’t a consequence of people realizing their true value; it is incredible growth of the smartphone. Most people can accomplish all of their tasks that they do on a tablet on a smartphone, and whatever the small percentage of computing needs of a regular person remain, are done on a 5-6 year old PC that is lying around the house and is rarely used. I mostly agree with his point except for one argument- If this was the case all along, why did the tablet market grow so quickly? The iPad has sold more units than the iPhone over the same time frame since it launched.
The iPad is truly a revolutionary device, and will definitely go on to replace the PC, but not just yet. There is definitely room for a device bigger than the smartphone in almost everybody’s life. What seems to have happened is that the iPad had its initial boom and now the market is self-correcting. Sales might go down again for a few more quarters, but the iPad will be a slow burner. When we reach a point when a tablet will be able to truly replace a PC, the iPad will shine. For this to happen though, iOS for iPad needs to change. A blown-up iPhone interface has proven to be not ideal for a lot of use cases. The strict AppStore rules might need to be relaxed. Apps should be able to interact with each other. A lot of rethinking of the philosophy which created the iPad should be brought under scrutiny. Running two apps side-by-side is not the answer to all questions (just look how successful Windows 8 has been). We need real full-featured business class applications to run on these devices. Office and Photoshop are definitely a start, but we need all the features that these have on PCs. A lot of the notable productivity softwares are still missing-Visual Studio, Creo Parametric-to name a few. Lack of any external peripheral support is also a huge issue right now, although it might be less and less a necessity going forward. Searching for new applications that can perform well only on tablets has been exciting, but for the transition phase that we are in right now, we need to find a way to run these traditional programs on tablets. The post-PC product is not going to outsell the PC where the latter, while shrinking in sales, is still king.
We are so close, and yet somehow so far.