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KGI: iPad shipments will see steepest decline ever in 2015 & a 12.9-inch model won’t help

KGI-iPad-Feb-2015

A new report from KGI out today predicts iPad sales this year will drop by around 30% marking the biggest decline in the history of the device. That 30% decline year over year compared to 2014 means KGI predicts Apple will sell 44-45 million units during 2015.

The decline in iPad sales has already started, according to estimates from KGI, with the firm predicting shipments in Q1 and Q2 of this year will drop by over 50%. More specifically, KGI says iPads will see a 52.7% QoQ in Q1 2015 with sales of 10.1 million iPads and a another 30-40% drop in Q2 2015 with 7.8 million units. Compare those numbers with the 21.4 million iPads Apple sold just last quarter alone during the holiday season. 

iPad shipments to plunge over 50% QoQ in 1Q15F & 2Q15F outlook dim; bodes ill for sales & earnings of suppliers through 1H15F. We forecast iPad shipments will decline 52.7% QoQ in 1Q15 to 10.1mn units, and continue to lose momentum in 2Q15F, dropping another 30-40% QoQ to 7-8mn units. 1H15F shipments around 18mn units, down 40% YoY; 2015F to struggle to top 45mn units, down 30% YoY. We forecast iPad shipments of 18mn units in 1H15… Based on seasonal patterns (shipments rise 10-20% HoH in 2H), we project full-year shipments will struggle to top 45mn units, likely marking a 30% decline.

KGI adds that while it’s “confident that the expected 12.9-inch iPad model can create an improved user experience,” it doesn’t expect the device to “contribute meaningfully to shipments momentum anytime soon.”

Contribution to shipments of 12.9-inch debut limited; retail promotion of existing models may not work well. While we are confident a new 12.9-inch iPad model can create improved user experience with enhanced productivity in the long term, we don’t anticipate it will contribute meaningfully to shipments momentum anytime soon, since its commercialization may fall behind expectations, leaving limited time for shipping… Moreover, we are conservative on promotion, likely executed by Apple (US) or retailers, of existing products due to the lack of innovative applications.

For some perspective, IDC reported earlier this month that Apple remained atop the worldwide tablet market in 2014. It did, however, slowly losing share to smaller, mostly Android competitors as the overall tablet market grew, according to IDC’s data. It’s certainly not the first time a potentially declining tablet market has been a topic of conversation for Apple watchers, but CEO Tim Cook has consistently defended the product line citing new opportunities for growth going forward including Apple’s new partnership with IBM to grow iOS device adoption in the enterprise.

As a result of the decline in iPad sales, KGI is predicting several Apple suppliers will take a hit due to the slump in iPad sales.

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Comments

  1. philboogie - 9 years ago

    The lighter they make it, the slower it’ll drop ¡

  2. TechSHIZZLE.com - 9 years ago

    While I’ll definitely be picking up the iPad Pro (or whatever it’ll be called), I just don’t see people replacing their iPad as often as their iPhone.

    I’m running an original iPad Air and didn’t really see any reason to upgrade to the Air 2.

    • rettun1 - 9 years ago

      Exactly. I think it’s common for people to replace phones every 1-2 years, maybe three. Tablets, for the most part I would guess, get replaced at least every three years.

  3. jrox16 - 9 years ago

    If this was the case with the iPhone, that would be big trouble, but the iPad, not so much. People don’t replace iPads that often, and Apple still makes profit on them, so if they have smaller sales so what, Apple will just offset that with other products like the Watch or the supposed ultra-light new MacBook Air. If people use their larger iPhones more, that’s fine too, Apple is brilliant because Steve always said never to be afraid of cannibalizing your own products/sales…because if you don’t, someone else will. Genius. This shouldn’t worry any Apple fans or the stock market. Now if it was the iPhone, that would be a disaster. The iPhone has no choice but to keep growing in sales, and this is Apple’s biggest and only real weakness, since the iPhone makes up over 50% of revenues.

  4. Howie Isaacks - 9 years ago

    These analysts seem giddy with excitement over what they prerceive is a failure of one of Apple’s products. What they fail to even bother considering is that now that there are a lot of iPads in the hands of Apple customers, not all of us feel the need to upgrade every time a new iPad is released. I kept my iPad mini for two years before I bought a new one last November. I didn’t feel the need to upgrade to the iPad mini 2 or the iPad Air. I’m sure it’s the same with a lot of iPad owners. We’re fine with the old. This is not a failure on Apple’s part. It’s just the way things are.

    • Gregory Wright - 9 years ago

      “Giddy with excitement”? I read the article and didn’t perceive anything other than KGI was expressing a professional opinion, as many others in the industry.

      • Howie Isaacks - 9 years ago

        They’re idiots. Period. I stand by my statement.

  5. brswllc - 9 years ago

    Needs multi-user support and support for multiple apps at a time. Capabilities are dated.

    • I agree with you on the multi-user support. The iPad isn’t dated.

      • Odys (@twittester10) - 9 years ago

        Agreed – iPad is not dated – its an amazing device. Apple just needs to re-position it so both iPhone and Mac do not cannibalize it as much.

  6. Марић рогИ - 9 years ago

    Yeah they don’t do anything to optimize ios with iPad my ipad air and mini retina works like shit after 7.1.2 … Shame on you apple. Iphone 6 works fine for now, but ipad NOT! Why i would buy new ipad and use for 1 year and after that work like shit to buy new one?! No this is the last time if they don’t do anything to optimize iOS for iPad ipad air 1 and mini retina will be my last ipad-s ever…

    • silas681- - 9 years ago

      Intersting! Not being an ass but I wonder if you were noticing the speed difference between the iphone 6 and the IPad Air and thinking that the iPad had slowed? I had a 3rd Gen IPad (the last with the 30 pin) and that was truly nerfed by Ios 8, so I upgraded to iPad air 2. That was a worthwhile upgrade!

  7. Odys (@twittester10) - 9 years ago

    I am always wondering what drives people to upgrade iPhones every two years but not iPad. – I think it has to do with lack of enough differentiation between the two. While Apple always touts specially made apps for iPad with iPone 6 Plus on one side and below $1000 Mac Air on the other – there is not enough compelling reason for people to upgrade or buy iPad as well. I think Apple needs to really focus on software aspect of iPad to truly separate it from both iPhone and Mac. The problem is it is hard to see in what way Apple can really do that. When original iPad came out, we had 3.5 inch screen iPhones – difference was substantial. Not so much with current iterations, especially with iPad mini. Now that there is anticipation of even slimmer Mac Air – it is sad to say but consumer appetite for iPad may wane. I see it more to become business tool with specialized set of apps.

  8. Toro Volt (@torovolt) - 9 years ago

    Among other factors, I think iPads are overpriced compared to the competition.
    I just sold my iPad Mini 2 and got an Android 7″ Tablet. Why? Because lighter, smaller(fits in my jeans pockets), the OS is Flexible, is compatible of many SmartWatches and the best part it was $300 Cheaper!!.
    There was a time when Android Tablets were a big no no but they have catch up to Apple these days.
    You can pretty much run all the Apps that Apple has and then some more.
    Honestly I am surprised how Apple is still selling them. I guess it takes time for people to realize this but they eventually will.

    • Odys (@twittester10) - 9 years ago

      there is no possible way your Android tablet can be compared to iPad Mini 2 – start with Touch ID

      • Toro Volt (@torovolt) - 9 years ago

        Yes I know is hard to believe but it actually compares.
        Well, my iPad Mini2 didn’t have a Touch ID but my LG G tablet as many Androids have have Smartwatch proximity pass something that the iPad doesn’t.

    • Toro Volt (@torovolt) - 9 years ago

      Had Apple released a lighter smaller iPad Mini I’d have stayed Apple. I used my iPad as my Main mobile communication device since the Tablet cellullar plans have awesome prices. But the Mini was not small enough for that use case. I dont give a damn about Retina since the iPad Mini Display resolution had a perfect balance of resolution and battery life/weight.
      Android has what i want it and went with it.

    • “You can pretty much run all the Apps that Apple has and then some more.”

      I know it’s Friday, but isn’t it a bit early in the day to be smoking that stuff?

      • Toro Volt (@torovolt) - 9 years ago

        Ok. Spotify, Facebook Messenger, Firefox Browser, Chrome Browser, Skype, Google Maps, YouTube. VoIP apps. WhatsApp. MS Office, Custome keyborads, Bright Hose Live TV, etc, etc
        Try an app like Twilight on iOS, it doesn’t exist. I can’t exist because of iOS limitations.

      • @ Toro Volt, OK, fair enough. I accept your point. I use Omnifocus, The Hit List and Things on both desktop and iOS. None are available on Android. However, scanning my overly inflated list of apps, I do note many which used to be iOS only and are now available on Android.

      • Toro Volt (@torovolt) - 9 years ago

        It might be true that iOS still has more Apps but the App variety gap has narrowed so much in the last year or so that is not really a factor. Most of the relevant Apps are in both platforms, and as I said, there are many Apps that iOS doesnt has because of iOS less flexible nature.

      • patstar5 - 9 years ago

        I havn’t been missing any apps from ios, maybe a few games but I’ve seen more apps I like on android. Like titanium backup, Tasker, and other apps for tech users. I love being able to backup my stuff over usb otg. Most of these apps are not possible on ios due to limitations.

        Now when you are comparing tablets, that is a complete different story. I don’t know why some services are only offered in apps, seems like they should have a website and an app.
        Well iOS is king of tablet apps, android is a joke. Windows is still best of both worlds, traditional programs and touch apps (still lacking).

      • Regarding apps, iOS definitely wins for exclusive games (Infinity Blade, Monument Valley, Tiny Wings… even cross-platform games can take forever to arrive on Android) and for music apps (Korg Gadget/iMS-20/iPolySix/iElectribe/iKaossilator, iSEM, iMini, Cassini, Magellan, Cubasis, Figure, Auria, GarageBand, dozens of others….)

        There are technical reasons for this – for example, until relatively recently it was very hard to get low-latency audio on Android devices, which is a fatal problem for music apps. Part of this is due to software support, and part is due to hardware issues.

        One of my favorite advantages of iOS is that it seems to have more “pay once” apps and games and fewer “free” apps that are ruined either by advertising or constant in-app purchases.

        However, Android wins for game system emulators and other things that Apple doesn’t permit, like file sharing software, tethering apps, etc..

      • If you’re a Mac user, iOS seems to have better integration with the Apple ecosystem.

        If you’re a Windows user, probably Surface (and maybe Windows Phone) integrates better.

        If you’re a Linux user, you probably have rooted your Android device already.

        If you’re a ChromeBook user, you probably got it from your school, and you have my sympathy.

    • patstar5 - 9 years ago

      My lg g watch was $80 and my oneplus one was $350. My phone costs as much as the apple watch and has almost the same specs as iPhone 6+! I love cyanogenmod, I just wish that there would be a better photos app for Android. I miss “years” view and “places”.
      Not switching back to ios, no usb otg support, no hdmi out without expensive adapters, no customizable launcher, still too limited compared to android.
      Now iOS had better integration and google now needs to be more like Siri and cortana. I also miss iTunes but been using my 90 day free trial google play music I got from my $30 chromecast.

      • valanchan - 9 years ago

        “… still too limited compared to android.”
        This seems to be the current meme. It’s similar to Microsoft calling bugs features.

        I do not consider it a limitation of the OS if my personal or financial safety may be, even slightly, involved.
        I’m willing to wear a seat belt and let professionals drive/fly as long as I get from A to B in safety.

  9. patstar5 - 9 years ago

    My IPad 2 is broken. Never bought a new one. Been using my windows 2 in 1 and my phablet. Now that my 2 in 1 is having problems I will get a MacBook pro.
    I wonder how Microsoft will do with surface 4 and the cheap windows tablets coming out.

  10. Barnes Dave - 9 years ago

    Apple is doomed, I tell you.
    Only projected to sell 125M iPads in 2015. That will only be $19G in gross profits. How will Apple ever survive?

  11. Drew Zhang (@ThorChow) - 9 years ago

    There is always a QoQ drop from the December (holiday) quarter. It’s more customary to compare YoY sales. That said, even that comparison will show a drop…just not as steep.

    Apple thinks the long-term prospects for the iPad are good. It’s still a ~$25B/yr source of revenue. That’s more than 2x Facebook’s annual revenue. Not bad for a 5-year-old product.

    Mac is a 30-year-old product and still healthy and growing. Does anyone really believe the iPad is in trouble? Apple has this product line planned out many years. Worry if you must, but 2015 is all about the iPhone 6 series, Pay and Watch.

    • Jim Huls (@Techslacker) - 9 years ago

      Actually I think this will be the year of Appletv or rather the 2015 Xmas season. The stars are lining up for it.

      As far as the iPad its about the value of the upgrade. People need a reason to buy and upgrade. The PC had things like office apps and then later the Internet to attract people. Macs had a user interface and a fashion appeal. ipods rode the music wave and had storage size and then better portability as well as a certain bit of fashion. iPhones have cell carriers, faster cell technology, fashion, and games. iPads for many are one trick wonders.

      I love my iPad and use it for a ton of different things but there is not a strong, impulsive reason for me, like many others, to fork out hundreds for new one that offers little for that cost to upgrade. There is a lot of value in buying one but not in upgrading. The software market despite its success still feels inadequate beyond very basic content consumption. Apple is at a crossroads here. They really need the enterprise market to pick up the momentum again. They also need software to mature on the platform but it’ll probably mean prices going up.

      Dropping their price point from $499 might be necessary in two years if the above areas don’t pay off. Android has the lower end and will easily take the basic content consumption market(Amazon says hi). A strong live TV content deal could help delay that though. The thing with an iPad is that fashion doesn’t really play much into a buying decision for it in anything other than brand.

      No matter though iPads aren’t going to just go away. It’s going to still make them a nice profit for years to come but unless they really dig in they’re not going to influence the direction that market goes very much. Some claimed in the beginning that the iPad was was just a large iPod touch…look at the state of the iPod touch and you’ll see where the iPad could be heading.

  12. That new retina MBA might canibalize it even more

  13. I wish i had a dollar every time an analyst was proven wrong.

  14. Here’s the issue: only users of the original iPad and the iPad 2 should consider upgrading. All iPads that have the Retina Display have at least 1 GB of RAM, and that is more than enough to run even iOS 8.1.3 reasonably fast. As such, the product replacement cycle for the newer iPads are going to be much longer than the replacement cycle for the iPhone.

  15. Kawaii Gardiner - 9 years ago

    And if there is a further decline in iPad sales with iPhone 6 and 6 Plus sales increasing along with Mac sales then I fail to see what the problem is. Btw, what evidence does KGI have for the 12.9inch tablet other than them really, really, really, really, really wanting one to appear? Maybe there should be a rule – if you’re an analyst and make a prediction but it turns out wrong then there should be a $1 million fine for publishing bullshit.

  16. Well I’m gonna buy that 12 inch beast so you’ll see that it won’t drop ^^ I have an iPad 3rd Gen. have to replace that finally :D

  17. Taste_of_Apple - 9 years ago

    Reblogged this on Taste of Apple Tech and commented:
    Oh look, KGI predicting a significant drop in iPad sales. People used to worry about the Mac and 30 years later it’s still doing fantastically. iPad gained a great deal of momentum early on, but with upgrade cycles more akin to those of PC’s it no wonder things aren’t keeping up in terms of expected upgrade numbers compared to iPhone (which is usually updated with more significant changes year after year). I use my iPad mini and my Air every day for almost everything. A bigger iPad will make it even more interesting. The iPad is going to be just fine in the big picture.

  18. b9bot - 9 years ago

    And all the iPad competitors sales also fell at higher levels than Apple. A tablet isn’t like a phone. It is a nice to have and once you have one you don’t necessarily have to upgrade the very next year. With software updates you could have one for 4 or 5 years without having to buy another one. A Pro level iPad may boost sales if businesses see a feature that the other iPads didn’t have.

  19. praxiz - 9 years ago

    Sometimes I wonder how KGI and all this analysts are thinking. They have IMO very little knowledge about humans and how the human mind is working. The world is so much more then you can catch it in tables and bar charts.
    When I have bought 7 refrigerator in my kitchen, how many mor do i need. Sometimes life is not about buying and more distraction all the time. We have hardly time to use all the stuff we buy. Everybody will sell more and more. How can this continue every year – MORE, MORE, BIGGER, BRIGHTER, LARGER….
    Apple is not the only company who like to get our money. Car factories, Furniture business, the film industry, the Music industry, new things faster and in a growing rate. Is this possible? How many jobs does every person need to fulfill the wet dream of all the shareholders and all the business owners around the world?
    How many iPad do I need in my house? It is a fantastic device, but not every year a new one. And where do we get all the resources from? If we use up everything on our planet to satisfy the shareholders of on generation – what about our kids and the next 7 generations…? The have to dig in our garbage, to find a little metal for them self, to build new stuff…? Pretty egoistic for just one generation to can show raising curves on their charts every year…

Author

Avatar for Jordan Kahn Jordan Kahn

Jordan writes about all things Apple as Senior Editor of 9to5Mac, & contributes to 9to5Google, 9to5Toys, & Electrek.co. He also co-authors 9to5Mac’s Logic Pros series.