Apple did it again and surprised everyone with yet another stellar financial performance during the recent holiday quarter. More revenue, more iPhones, more Macs and Watches, and just a hair under as much profit as the record set a year ago. Everything is coming up rose gold at Apple.
Except for the iPad. What Steve Jobs’ heralded as the device to usher in the post-PC era has fallen on hard times. A year ago the iPad sold three times the number of Macs and had greater revenue. This year it barely doubled Mac sales and revenue was almost $2-billion less than the Mac. What’s wrong with the iPad?
The Perfect Storm
iPad sales have dropped for about three years straight. What’s wrong? First, don’t blame the iPad. Blame Apple’s inability to escape from the perfect storm that changed the technology gadget landscape. After the iPad was launched in 2010 it enjoyed rapid sales increases for a few years but then began a long downward trail that has not abated.
What happened from 2010 to 2014?
First, Android smartphones began to dominate the industry. To differentiate their product’s from Apple’s iconic iPhone, they introduced larger smartphone screens. Those larger screens once were an inducement to buy an iPad. Instead, customers had less of a need to buy an iPad because larger screens were everywhere.
Second, traditional Windows and Mac notebooks became smaller and more powerful, and the difference in size, price, and performance between say, an 11-inch MacBook Air and an iPad Air became obvious. A fully loaded iPad was no match for an entry-level MacBook Air yet the price was similar, and among smaller PC notebooks, the price differential was even less.
Third, Apple allowed the iPad to languish and dry on the vine. Instead of boosting the device to ever improved specifications each year, the iPad was positioned to not cannibalize iPhone sales, and instead, its own sales fell each year. The iPad Pro models introduced the past few years did nothing to slow or stop the downward trend.
Let me compare a 12.9-inch iPad Pro to an entry-level 12-inch MacBook to get an idea of bang for the buck.
iPad Pro with 256GB of SSD storage is priced at $999 but needs a comparable keyboard which is priced at $169, so the total is $1,168. The MacBook starts with 8GB of RAM, 256GB of SSD storage, and a comparable Intel Core m3 CPU for $1,299. Size and weight are about the same. The Mac can also run more powerful applications, including Windows 10 and various flavors of Linux, in addition to macOS Sierra. The Mac may not have the number of available apps as the iPad Pro, but it’s a vastly more powerful machine.
Fourth, Apple has failed to keep the iPad upgraded with new technology and instead, sells older iPads as if they were new models. They are not. Customers are not stupid. About all Apple has added to the iPad line is Touch ID and iPad Pro.
Despite the iPad’s obvious woes, Apple is unlikely to give up on a product that still generates close to $20-billion in revenue, a few billion in profits, and sells upwards of 60-million units a year. Name another manufacturer with such a product line and it would be a stellar success instead of an anemic track record.
What can Apple do?
The key to a product’s success is differentiation, and that’s exactly where Apple has a problem. The iPad is little more than a bigger iPhone and bigger iPhones are into three generations already, dating back to iPhone 6 (about when notable iPad’s fall began). Apple needs to make sure the iPad is well differentiated from iPhone and Mac, as well as the competition. As of now, the iPad is not a compelling device to spur new sales. Upgrades come every couple of years, while iPhone gets the complete makeover every year.
What is the compelling reason to buy an iPhone? And how can it be positioned so as not to cannibalize Mac sales (too much) but become a useful addendum to Apple customers who may already own an iPhone or Mac?
First, how about a really good, really thin keyboard? What? A keyboard on an iPad? Sorry. Yes. A keyboard is the best way to enter information into an iPad, so, Apple, make a good one, make it thin and light, and built it in; detachable, of course. Second, just as Apple makes professional level applications for the Mac– Final Cut Pro, Logic Pro– iPad could use a few apps that clearly differentiate it from the iPhone. Pencil? Yep. Throw it into the mix. All iPads should come with Pencil, regardless of size. The idea here is to make iPad a compelling enough device to buy alongside an iPhone and a Mac. That’s what it was in 2010, that’s what it’s missing now.
A few other touches would help the differentiation mix. How about multiple users? The Mac has multiple users. The iPhone doesn’t need it (although more than a few children-toting parents would appreciate a Guest User mode to avoid child contamination) but that would make iPad a more compelling device.
See, Apple? Was that so difficult?