With reports of flat or declining sales of the iPad, confirmed in Apple’s March quarterly results, some clearly worry about the future of the tablet. Sales were reported as 16.3 million, compared to 19.5 million last year, which is a pretty big drop, a figure noticeably lower than analyst estimates.
Of course, it’s also questionable just how much iPad “sell-through” there really was in the March quarter, at least based on Tim Cook’s somewhat convoluted description of inventory management. In theory, after you account for the differences in the way inventory was handled last year compared to this year, the downturn was only around 3%, which wasn’t very much. But Apple’s critics regard it as little more than corporate spin control with geeky overtones.
Whatever figures you accept, I suppose there’s reason to wonder where the market is going. Forgetting the spin about the high adoption curve in the enterprise and in school systems, you wonder whether the public is actually cooling on tablets. The global tablet market was also relatively flat, so maybe there’s a point to that.
Or perhaps, as The Mac Observer’s John Martellaro will explain on the next episode of The Tech Night Owl LIVE, the market is maturing and ready for the next phase. What that phase might be is anyone’s guess, but if sales don’t begin to soar once again, I wonder if Apple has something in the works to rejigger the market.
Now John has had his own ideas, but I’ll suggest a few of my own that may not at all resemble his.
One possibility to jump start sales is just to sell the next version for less. There’s already precedent for this in the Mac market, with that $100 price cut for the newest MacBook Airs, which also offered a slight speed bump. Apple previously cut the prices on the MacBook Pro with Retina display, and perhaps other Macs will benefit from new pricing plans as they are updated over the next year. Imagine, for example, a Mac mini for the original price of $499 (it’s $599 now) along with slightly better performance.
Moving the MacBook Air to a starting price of $899 was a critical decision, because Apple has entered the volume segment of the notebook space. So people who might have spent $500 or $600 for a Windows notebook might not find the price jump to buy an MacBook Air to be quite a stretch. Sure, it’s only $100 less, but there’s a lot to be said for the psychology factor.
Now when it comes to the iPad, I suppose Apple could make a similar move. With economies of scale, how about an iPad mini with Retina display for $349 instead of $399? What about offering the 2014 iPad Air, however it changes, for $449 or even $399? This may not seem a lot either, but it’s a pretty high percentage, and if other configurations scale up appropriately, Apple might address a greatly expanded market.
Yes, this is the age-old argument that Apple’s prices are too high, but the company also needs to allow for high profit margins. The critics will pounce on them for that, even though other companies who might earn little or no profit continue to get a pass. So any move has to be done with deliberate care, recognizing the costs of the raw materials. But Tim Cook and crew can make better deals for components than any company in the industry, so I suppose it’s possible to get pricing that, with expected high volumes, will allow for the lower prices without seriously sacrificing margins.
Such a move also assumes the 2014 iPad lineup will, in large part, be just a modest refresh. Both iPads will get the rumored A8 processor, and the iPad Air might receive the expected Touch ID in the process.
But what about all-new models? The one getting on and off speculation is the alleged iPad Pro, a version with a 12.9-inch display that might include a case that sports a keyboard. That, however, seems to take it too close to Surface territory when you factor in the fact that there’s an Office for iPad now. Once Apple gets into a display configuration that large, you wonder if a standard MacBook Air or MacBook Pro wouldn’t be the better choice.
Big tablets, mostly those convertible notebooks on the Windows platform, have been poor sellers. Even if it’s just a jumbo-sized iPad, I don’t see it as the mass market product. It’s possible Apple might consider one for more specialized use, but it’s still about numbers. Right now, the only limited focus hardware in Apple’s lineup is the Mac Pro.
And, no, I wouldn’t regard a phablet as an iPad. It would be an iPhone of some sort; one rumor calls it an iPhone Air. But a clever pricing strategy, and some really neat features for iOS 8 focused more on the new models than the old, might swing more customers to Apple. And the lower prices might also make customers who might have otherwise chosen Android think twice.
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