The iPad market

Apple Pencil (2nd generation)
Apple Pencil (2nd generation) (Image credit: iMore)

Introduced seven years ago this month, Apple's late co-founder, Steve Jobs, said iPad had to fight for its right to exist between phone and laptop by doing some things better than either of the other two. Since then, Apple's ability to tell that story has varied from the heights of "technology alone is not enough" to... not at all. And that's led to a lot of theories about iPad and its future.

Tim Cook, speaking during Apple's Q1 2017 conference call:

The iPad, Steve, we had a 1.6 million unit swing on channel inventory between the years. In the year-ago quarter we increased by 900 [thousand], in this quarter, we decreased by 700. On top of that, and from an ASP point of view, in the year-ago quarter we launched the iPad Pro 13-inch — that would be the iPad with obviously the highest price on it — we would have done the channel fill plus the launch of the product, and so that would have bolstered the ASPs in that particular quarter. In addition to all of that, we did under-call the number of iPads that would be in demand for the quarter, and that compounded a shortage issue that we had with one of our suppliers. All in all, there was quite a few things going on there.

In other words, the 12.9-inch iPad Pro launched at the end of 2015 but no new iPad launched at the end of 2016, much less a high-margin one. Combine that with less inventory and shortages due to a supplier, and there was both less drive and less availability.

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That takes the edge off the quarter but not off iPad in general, which by any measure isn't accelerating as fast as it did in the beginning. It was that initial acceleration — faster even than iPhone in its first years — that created incredible expectations around iPad. And it's those expectations which have now translated into incredible expectational debt.

The problem with acceleration is that it has no impact on speed limit. If you go from 0 to 60 in 3 seconds or in 6 seconds, and the speed limit is 60, you simply hit the limit sooner. iPad hit its current limit wicked fast.

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In many ways, you could go so far as to say there's no tablet market, just an iPad market. In other words, people don't by tablets, they by cheap video/game players (which Apple wants no part of) or they buy iPads.

That's what Steve Jobs meant when he called iPad the future of computing. His dream, and the consistent goal of Apple over the years, from Apple II to Mac to iMac to iPad, was mainstreaming computer technology. It's also why Jobs spoke of trucks and cars. iPad wasn't a PC, it was something that the majority of people would eventually find more practical than a full-on PC.

iPad, at its core, made apps and the web accessible and approachable to people, young and old, who either couldn't, hadn't, or simply never enjoyed using a PC.

It's why other vendors who tried to use "full desktop OS", multi-window multitasking, Flash, and other traditional computer paradigms to compete with iPad failed so spectacularly always. It's also why Windows on a tablet wasn't considered a selling point but a detriment. The mainstream didn't want it. They wanted iPad.

That's why so many people not only bought an iPad 2, or one of the iPads since then, but have held onto it. It's not just as much computer as they needed, its as much computer as they wanted, and they'll use it until it breaks down and stops being usable.

That's very different from the iPhone market where people upgrade every couple of years, give or take. It's closer to the Mac but, thanks to it being even more of an appliance, likely has an even longer lifespan. (And the initial acceleration that comes with a new product category being launched stuffed that cycle early.)

So, while the popular narrative is that iPad is failing, a counterargument could be made that iPad succeeded too well, too fast. It's the old PC "good enough" problem writ large.

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We've also now had three generations of iPhone Plus putting pressure on iPad mini from below and two generations of MacBook putting pressure on iPad Air/Pro from above. The fight for the in-between has only gotten tougher.

Still, even this quarter's numbers, hamstrung as Tim Cook explained them to be, need to be considered carefully: iPad sold 13.1 million units, Mac sold 5.3 million.

The Mac tends to hold steady even as the PC market continues to decline, and iPad accounted for more than double the sales of the Mac.

That makes it hard to imagine the solution to the iPad problem is really making it more Mac-like — i.e., more like a traditional computer. That's different than simply making it more powerful by continuing what iPad Pro and iOS 9 started and adding more features like drag-and-drop and easier filesystem access. Personally, I'd love the former (I've argued for an iPadOS for years), though not so much the latter. Opinions vary on that, of course.

Either way, though, that only solves for "us" — for the tech niche. It adds a relatively small adjacent market to the overall iPad market but does little to for the mass mainstream market. Likewise, making bigger again iPads. That'd be great for creative professionals who want a digital drafting or drawing table, and I'd love it lots, but it also only solves for a small niche.

In order to incentivize mainstream iPad sales, Apple will need to create compelling features for the mainstream that spur upgrades in spite of current hardware being good enough. And that's a real challenge.

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Most people don't upgrade PCs unless they have to either. Gamers are a notable exception but the types of games that are most popular on iPad aren't typically the ones with the highest hardware requirements.

Many people do upgrade phones even when they don't have to. That typically comes from features that are compelling on phones, especially better cameras, and from carrier or retailer incentives. It's unclear iPad benefits in the same way from things like camera enhancements, which the 9.7-inch iPad Pro got last spring, and the new features that are compelling, like Apple Pencil and Smart Connector again play more to the niche than the mainstream.

Apple offers an iPhone Upgrade Program to, which is similar to a lease and offers a new phone yearly, but whether or not an iPad Upgrade Program would work is an open question. (And Apple would have to stick to a yearly upgrade cycle, which may not always match their roadmap.)

Tim Cook again:

If I sort of zoom out of the 90-day clock and look at it, we've got some exciting things coming on iPad. I still feel very optimistic about where we can take the product. When we look at the number of people buying iPads for the first time — which is a good thing to look at from a point of view of whether things are reaching a penetration point or not — the numbers indicate that it's not close to that kind of thing. The customer sat numbers are through the roof; literally, the customer sat for the iPad Pro is 99%. It's stunning.And so I see a lot of good things and hope for better results, but we are still currently in this shortage issue now, and I'm not projecting to get out of that totally during the quarter. It will damper this [upcoming] quarter somewhat. But again, beyond the 90-day clock, I'm very bullish on iPad.

Cook knows the future of iPad better than anyone on the planet and he typically says exactly what he feels and thinks. (I sometimes wonder if that makes things confusion to people not used to CEOs being so candid.)

There are new iPads coming — Apple isn't getting out of that business — and they'll be better than any iPad that's come before.

Short term, people who bought iPad 2 or iPad 3, the original iPad mini or Air will start to time out and the upgrade cycles will start to kick in.

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Longer term, Apple will have to decide if they want to keep iPad aimed squarely at the mainstream, if they want to continue to explore the pro niche, or if they can do both — If they can avoid making it a truck but somehow nail iPad as SUV.

For that, we'll have to wait and see.

Rene Ritchie
Contributor

Rene Ritchie is one of the most respected Apple analysts in the business, reaching a combined audience of over 40 million readers a month. His YouTube channel, Vector, has over 90 thousand subscribers and 14 million views and his podcasts, including Debug, have been downloaded over 20 million times. He also regularly co-hosts MacBreak Weekly for the TWiT network and co-hosted CES Live! and Talk Mobile. Based in Montreal, Rene is a former director of product marketing, web developer, and graphic designer. He's authored several books and appeared on numerous television and radio segments to discuss Apple and the technology industry. When not working, he likes to cook, grapple, and spend time with his friends and family.

72 Comments
  • Too much for me. Sent from the iMore App
  • I have an Apple Watch, Apple Phone, Apple Pad, Apple Mac (laptop), Apple Display and Apple Router I have the other five mostly because I love the Mac and want other things to work with it. With a better keyboard (so important) and retention of MagSafe (a killer feature), I would have spent $4-6K on Mac Laptops this year despite my hatred of dongles. Would probably even have bought 1-2 as gifts. I'm happy with everything else, but there's only so much time to spend with screens in a day. Still very few things that are easier on a Pad than a Mac. So if I could only have two it would be a Mac and a Phone.
  • Foing to read that padOS article in a moment. I have to say, the iPad has a file management problem. Only now am I able to handle text file thanks to iA Writer and Readdle's Documents. iA write can open files anywhere in iCloud and Documents. However, I need to use a Mac to move them in between sandboxed folders. Still, importing them to iA Writer is often the best option, as it can do so much with them. PDFs are much more complicated. Only Readdle's Documents and PDF Expert work together; Scanner Pro has its own sandbox. At least these also use iCloud. Not so for PDF Viewer and Adobe Fill & Sign. Then you have iBooks, which can't highlight or even share (email aside). I'm going to have to use a Mac to sort out "printed" websites, eBooks, magazines, research papers (grad student), cheat sheets, plus other odds and ends. It's a mess. Pictures have the opposite problem. I have wallpapers in Photos that really don't belong there. I can find screenshots but not filter them out. There are no smart folders or way to use tags in a "controlled vocabulary" fashion. There's no iA Writer for images in Documents or Scanner Pro. It's a mess.
  • I agree. You can't backup multiple files quickly. I can't export Procreate files quickly to drop box. It can't export them to iCloud. I should be able to plug up external drives work with Procreate files. Or back them up on the drive. This cloud storage stuff isn't a good solution. It's super slow. In the age of solid state drives we shouldn't HAVE to rely on cloud storage as the only option. I hope the iPad stays quintessentially the iPad. But I want it to get more advanced. There's no reason to have a modern computer that has such problems with peripherals such as external drives. Or massive amounts of files.
  • I refuse to buy Procreate until they add iCloud. I would love a Mac viewer/exporter app to tie into that share. Agreed on backups. The only option is a Mac which does work well, but does not let you access files. We should have Time Machine for iOS. I also would like to see some kind of Sopport for wireless storage devices, even more if it was a new, secure, thought-out Apple protocol.
  • Coming Soon WebSonar Libraries
  • I hope Apple just keep the iPad as tablet, running iOS. Whilst Microsoft has been largely successful in their hybrid approach on the Surface line, there's still a lot to be said for a simple and fluid tablet experience, and thus is where the iPad remains peerless. In terms of improvement I would like to see better file management access (whilst maintaining security of course), and a move to USB C from Lightning.
  • Certainly better file management but I really like the Lightning port.
  • The USB-C port is nice as well, it can be plugged in both ways just like the Lightning port. The advantage is that it's not proprietary and therefore you'll be able to use the same cable for other devices
  • My main concern is that it isn't as sturdy but I haven't seen the design up close. I really like that the Lightning connector is flat and solid.
  • Fact: lower iPad sales for about 3 years in a row now. I don't care how you like to spin it.
  • Fact: it doesn't appear to bother them a whole heck of a lot, nor does it appear to be hurting the bottom line.
  • Would you have preferred they made an inferior product that needed replacement more often?
  • If the update cycle for the iPad is similar to Macs and Windows PCs I see a big problem with the upcoming kill of all 32-bit iOS apps. There are still a lot of "old" iOS apps around that are regularly used on iPads like board games (e. g. Trivial Pursuit) but will remain 32-bit apps. If Apple really flips the kill switch for all these apps in iOS 11, this will upset especially the iPad users.
  • Part of the job of being a developer is keeping your products working on the latest technology. They've had plenty of time to make their apps 64-bit, if anyone's upset, complain to the developers, not to Apple. It's not Apple's fault
  • This doesn't help. Hasbro obviously decided they are no longer interested in publishing their games as iOS apps and they will no longer support all the existing apps of their board games out there. But these apps still work perfectly on the current iPad Pro and brighten up every family meeting. With iOS 11 all of these will be suddenly no longer working, although we paid good money for these apps just a few years ago. But the same board game in physical form that was bought 20 years ago still works. That doesn't make sense. Or another example: For catholic Christians there is only one official German translation of the Bible available (the so called "Einheitsübersetzung"). The ONLY existing digital form that could be read on iOS devices (there is no ebook version!) is an official app. For some reason the company acting for the German catholic church is not very active on supporting their bible app, but it just works as it is on all iOS devices. With iOS 11 it will no longer be possible to read the bible in German. And why? Just to cut off a few API calls. If there would be some kind of iOS emulation for old apps (similar to emulators for Mac OS 9 devices), it would ease the pain.
  • Board games in physical form continue to work because they don't rely on ever-changing technologies. If an app stops working that you paid for, Apple should refund you for it if you want the money back, I know that's not the solution to your problem but at least you get some sort of compensation. "If there would be some kind of iOS emulation for old apps (similar to emulators for Mac OS 9 devices), it would ease the pain." This could get really messy on the software side, as not only would Apple have to maintain current software, but they would have to maintain the "emulator" as well. Apple just aren't going to do that, not with iOS anyway. Unfortunately, these are the developers' issues, the blame can't be shifted to Apple. It's like saying if the Mac still had a floppy disk drive, you could still access your existing data on them. I'd recommend you stay on iOS 10 if there's apps that you desperately need, or otherwise look for alternative apps which are created by competent developers.
  • It's not that easy. There is no iOS emulator - by no one, because Apple does not allow the development of an iOS emulation. I work in a national library and digital preservation is a big issue. If you consider software part of the cultural heritage, you should realize, most of it will be lost forever, because there is no way to preserve it for future generations. File format migration and emulation are the only common strategies to try to maintain access to the content. But especially everything developed for iOS will be lost, because there is currently no way to preserve it.
  • It's not like this hasn't happened before, there are still many apps on the App Store which haven't been updated since around iOS 3-4, and simply don't work on iOS 10. These apps have already been lost, so if this is a "problem", it's a problem that's existed for a very long time. I don't think most people are concerned about losing unsupported apps, but yes in terms of digital preservation then they will simply be lost
  • I am reading the Einheitsübersetzung right now on Logos Bible Software. FWIW. J.
  • @gewappnet: things that run fine on 32-bits devices like iPad 1/2/3/4 and iPad mini 1 should keep running exactly like they did, and reinstalling e.g. a payed-for board game should remain possible (these are mostly limited space devices). No reason to destroy working functionality on those 32-bit devices, they won't receive iOS 11 anyway. All 64-bit devices will receive iOS 11, and running 32-bit apps pays the penalty of two sets of libraries. Warning against this, like now, is fine. But blocking 32-bit apps altogether would make me hesitate about installing iOS 11. iOS 10 would remain the best choice for many that would not like to lose their investment in older apps. That cannot be what Apple wants.
  • Very perceptive take and great writing. Rene, I for one hope that Apple doesn't steal you away from iMore to become a market analyst guru!