As tablet market hits a wall, Apple looks to IBM alliance to reignite iPad growth

“Apple Inc’s iPad is losing steam just four years after its release, but an alliance with International Business Machines Corp could rejuvenate a flagging product by entering into a largely untapped corporate market,” Christina Farr reports for Reuters. “Apple shipped 13.2 million iPads in the June quarter, 8 percent fewer than a year earlier and lagging Wall Street’s forecast for 14 million or more. Sales of the device, which accounted for 15 percent of revenue, fell short of Wall Street’s expectations for the second quarter in a row.”

“Apple helped create the tablet market in 2010 with its first iPad. But growth has plummeted from 2012, as larger phones became more popular and people delayed replacing their tablets,” Farr reports. “Chief Executive Officer Tim Cook described iPad sales as ‘very bifurcated’ – they continue to grow at 50 percent or above in emerging markets such as the Middle East and China, but in developed countries like the United States, the ‘market is weaker.'”

“Research firm IDC lowered its forecast for 2014 worldwide tablet demand growth to 12.1 percent – a fraction of the 51.8 percent expansion of 2013,” Farr reports. “‘The tablet market globally has really hit a wall,’ said Cantor Fitzgerald analyst Brian White. Another threat to iPad sales may come from within. Apple is expected to introduce a larger 5.5-inch (14.0-cm) iPhone in the fall. At those dimensions, the iPhone would begin closing in on the 7.8-inch (19.8-cm) iPad mini. ‘You have the negative impact of the larger screen iPhone and what that would do to iPad mini,’ said Piper Jaffray analyst Gene Munster. ‘You’re going to get a larger screen iPhone before you’ll get contributions from the IBM partnership.'”

Read more in the full article here.

MacDailyNews Take: People aren’t “delaying” iPad purchases. iPads simply have a longer lifespan than some people expected. They are not smartphones. There is no driving need to replace them every 24 months or sooner. The length of the iPad replacement cycle is closer to a Mac’s than to an iPhone’s.

13 Comments

  1. I would have to agree. I have an iPad mini retina display and I have no reason to replace it any time soon.

    I like this format better than the full sized iPad . Simply a matter of personal choice / need.

  2. MDN take is spot on. Still using my iPad 2 over three years and it still works fine. Fingerprint id that is tied into security over payments would however cause me and many others to consider upgrading. Apples drive of the technology will drive the hardware upgrade cycle. They need compelling new technologies to drive hardware.

  3. Well, whatever this says about the iPad’s quality as a product, it’s also clear that from a business strategy standpoint, Apple was basing some of its business decisions on an assumption that people would replace their iPads more often than they are, and now that it’s becoming clear that iPads have a longer lifespan than originally anticipated, Apple’s going to have to adjust its strategy to accommodate for that.

    Don’t get me wrong – it’s a good thing that iPads are able to last longer. It also means that Apple won’t sell as many of them as frequently.

  4. I just bought my first iPad back in April with a 128GB Air on AT&T. Never really needed one – and still don’t, to be honest – but I’m planning on buying my wife an iPad mini for her birthday in the fall. I like the full-size Air as a backup for DJing off my MacBooks but the mini seems to be a better size for general use.

  5. I’m happy with my hand-me-down iPad 1, which still fits my work and leisure needs. Looking to get an iPad mini as a more portable and future-proof addition.

  6. The replacement cycle on the iPhone was driven by the carrier-subsidized pricing scheme. It didn’t cost anything to upgrade, since you could sell your old device to cover the upfront cost for the new device, and you didn’t save anything by not upgrading, since the carriers kept charging the same monthly fee. I think the new carrier pricing models will impact the iPhone replacement cycle.

    Instead of a negative, the longer iPad replacement cycle should be viewed as a testament to the durability and robustness of Apple products.

    In my case, there will come a time when the next iOS release will not be supported. That’s replacement time. Although, I do like the Lightning connector on my phone a lot better than the old Dock connector. Yeah! That’ll work! Honey, we need new iPads! Now!

  7. I don’t think the iPad market is hitting a wall, I just think analysts have underestimated how long people would be holding onto them. They’re not cheap and people are tending to keep them as far longer than they keep their phones.

    I think it’s time the analysts revise their expectations of a market they know virtually nothing about. Four years of history is far too short a period of time from which to gather enough data to make predictions.

  8. Enterprise will have to get used to the loss of legacy hardware and much faster upgrade cycle if they are going to upgrade their PC laptops for iPads.

    By the time most companies would have finished their internal needs review a new model and iOS version will be upon them!

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