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Tim Cook insists iPad prospects still rosy despite 18% drop in sales, 22% fall in revenue

Apple’s press release yesterday noted “all-time record revenue from iPhone and Mac sales as well as record performance of the App Store,” while remaining silent on iPad sales. The reason? The slide continued last quarter, with year-on-year sales down 18%, and a reduction in average selling price meaning revenue was down 22%.

Tim Cook acknowledges that the switch to larger-screened iPhones mean the iPad is being squeezed from both sides.

There’s probably some level of cannibalization that’s going on, with the Mac on one side and the phone on the other.

It’s also undeniable that people upgrade their iPads less frequently than their iPhones–Cook putting the number at “somewhere between” the 2-year cycle of the iPhone and 5-year cycle of Mac–meaning that Apple needs to find a continual stream of customers buying an iPad for the first time … 

While some have argued that this is a big ask in a saturated market, Cook argues that this isn’t the case.

First-time buyer rates are very high. By very high, I mean that if you look at some of the developed markets, like the US, Japan, the UK, you would find that 50 percent of the people are buying an iPad for the first time. If you look in China it’s over 70 percent. And so when you have that kind of first-time buyer rates, you don’t have a saturated market.

Cook says that high usage figures also demonstrate the continued popularity of the device.

Usage is six times our nearest competitor. Usage measured in web browsing is like 71 percent of total tablets. Also the commerce taking place across the iPad is enormous. Essentially over 80 percent of the commerce on tablets is taking place on iPad.

While there would be no “miraculous change” in short-term sales, he believes that the IBM partnership is a sufficiently big deal to “move the dial” on sales, with 100 vertical market apps expected to be available by the end of the year.

I think the partnership with IBM and the work that we have going on in the enterprise [sector] is profound, I think we’re really going to change the way people work.

Cook didn’t comment on the rumored 12-inch iPad Pro, merely observing that new products were in the pipeline.

Via MacWorld

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Comments

  1. All very good observations by Cook. We have recently replaced a 3-year old iPad 3 with an Air 2, and will shortly replace a 32 month-old Original iPad mini with an iPad min3. In both cases the “old” is in spectacular condition and will be sold on eBay for at least 50% of its original cost. Its not just the new sales – its the ecosystem weight.

    • rettun1 - 9 years ago

      This is my opinion, but might I suggest getting a mini 2 instead? The difference between the two is a Touch ID sensor and a gold color option, so saving a hundred bucks might be nice. Either that or wait until the end of the year to upgrade.

      But you sound like somebody who knows how to make the most of their tech, and has a good idea of when to buy

  2. 89p13 - 9 years ago

    With my iPad, I went from the 1st gen to the third gen (retina) to the Air2 – all of these upgrades were great for me.

    iPhone started with the 4 – then 4s – then 5 – then 5s – to 6Plus.

    For me, iPad upgrades are more based on new / improved hardware while the iPhone is an (almost) automatic yearly upgrade.

    YMMV.

  3. PMZanetti - 9 years ago

    ” if you look at some of the developed markets, like the US, Japan, the UK, you would find that 50 percent of the people are buying an iPad for the first time. If you look in China it’s over 70 percent. And so when you have that kind of first-time buyer rates, you don’t have a saturated market.”

    …and that’s all anyone really need to know. There is a long way to go before saturation hits. Yet, you will still have your arm chair bloggers that respond to every iPad-is-doomed article with “of course its doomed, Apple has not innovated enough with iPad to make me upgrade from Air 1 to Air 2!!”

  4. Gregory Wright - 9 years ago

    “iPad rosy prospects”, I don’t know. I have the iPad Air. At first, I loved it and could not put it down. Lately, I rarely use it. I’m using my iPhone 6+ more than I use my iPad. I think the novelty has worn off. Economically, for me, it doesn’t make sense for me have both. Today, I’d say I won’t purchase another iPad as long as Apple keeps a larger iPhone.

  5. Built Frenchié - 9 years ago

    There should be a good reason to upgrade an iPad yearly will be my answer to this article. If you plan to purchase a new tablet, you have to ask yourself a few questions: 1.) Does this tablet get the job done for next couple of years? 2.) What are your plans for this iPad? 3.) Do you really need it? Many people cannot answer these questions successfully and some can. My reason I purchased my iPad mini is portable and I can complete easy task without using my Macbook Pro. Is great presentation tool during my conference meetings.

    • Ben Lovejoy - 9 years ago

      I went from the iPad 2 to the Air, as Retina wasn’t really persuasive for me. Apple got me with the Air 2, though, as by that time I was hooked on Touch ID.

      • 89p13 - 9 years ago

        Touch ID was a big reason I waited when the iPad Air was introduced. At that time I had the iPhone 5S and my wife had the iPhone 5. She had never used Touch ID – but I knew that she would love the weight reduction in the Air, so I bought her that for Christmas of 2013. I wanted to wait until the Air had Touch ID – which, thankfully, it did this year – so that was my Christmas present from her.

        We now both have the iPhone 6Plus but she is no longer in “Corporate America” so she doesn’t miss the Touch ID on her iPad Air, where that loss would be a deal breaker for me.

        We both love our iApd Airs and our iPhone 6 Pluses.

  6. Colby Landwehr - 9 years ago

    I have to agree with Tim on this subject. I think long term the iPad will be an effective enterprise tool, given the amount of work being done by IBM. If you give companies a small light mobile alternative that is as affective at getting jobs done as a desktop program then companies will buy iPads. The question is not really if Apple can pull this off, it’s more, can IBM build an extensive and complementing suite of apps and infrastructure that will convince companies to invest in large amounts of iPads. The Ipad is already an excellent product both in terms of hardware and software. What the iPad needs is something to differentiate it in the eyes of companies like the 500 who could invest large amounts of money in to iPads, and i think that is where IBM comes in to play.

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Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!


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