Apple’s revised iPad strategy to stress more, not less, PC

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There’s a way for Apple to rejuvenate iPad sales, says analyst, and it will rely on power

Longer-than-expected tablet lifespans have led to a sluggish market for Apple’s iPad, but the company seems poised to pivot by pitching the iconic device as more, not less, like a personal computer, an analyst said today.

“At the beginning of the [tablet] market, people bought tablets because they were different from PCs,” said Carolina Milanesi, chief of research and head of U.S. business for Kantar WorldPanel Comtech, in a Friday interview. “That was what got early adopters interested.”

Because tablets were seen as something other than a personal computer, in other words, they were attractive, especially to those who already owned smartphones — Apple’s own iPhone, in particular. The tablet, the thinking went, was simply a larger smartphone — it relied on the same operating system, the same app ecosystem, the same touch-only user interface (UI) — minus the calling.

Since then, tablet sales, iPad included, first stalled and then slumped. According to research firm IDC, tablet shipments declined by 7% in the second quarter after falling 4% in the first. Meanwhile, iPad sales have contracted for six straight quarters, falling 23% year-over-year in the first quarter of 2015, 18% in the second.

Most analysts have attributed slowing iPad sales to stretched device lifespans, longer than what they had figured when the category debuted with the original iPad in 2010. Then, many believed that buyers would refresh their tablets every two years or so, a cadence similar to smartphones.

The reality turned out differently, with intervals much more like PCs than phones.

Kantar’s data supported that. Of the iPads currently in use in the U.S., more than a quarter — 28% — were iPad 2, the March 2011 model; one-six, or about 16%, were iPad 3 (March 2012); 8% iPad 4 (October 2012); 14% iPad Mini (November 2012-2014); 12% iPad Air (November 2013); and 4% iPad Air 2 (October 2014). Close to half — 44% — were models 3+ years old.

According to Kantar, 30% of the iPad owners they polled have had their current tablet for 36 months or more.

“It’s not lack of engagement,” she said, that hampered iPad replacement, citing statistics from Kantar’s surveys that showed larger fractions of the iPad base using their devices daily than those with rival hardware. For example, 39% of iPad owners used it daily for email, almost double the 21% of Kindle Fire owners.

Lengthening PC replacement cycles — a cause, say experts, for the 14-quarters-and-counting slump in personal computer shipments — were due in part to owners’ disengagement. They used their PCs less as they turned more to their smartphones for core chores like email, social media and Web browsing.

Those are the people whom Apple should be targeting, and will later this year, Milanesi argued. Because while they are dissatisfied enough with their PCs to put them aside, users could still be convinced to buy a replacement, even if that stand-in wasn’t a traditional “personal computer” in a traditional form factor of laptop or desktop.

“Non-tablet owners told us, ‘My PC is good enough’ and that they’re not engaged with their PC but use the phone more. But they also don’t think the tablet is as good as a PC,” said Milanesi.

More like a PC
If Apple can demonstrate that the iPad is a suitable substitute for a PC, Milanesi thought that the Cupertino, Calif. company could reenergize sales. “If there’s something that is as powerful as a PC but at the same time, agile like a tablet, consumers will be interested,” she said.

That strategy wouldn’t be new: Microsoft has relied on it since 2012 when it introduced its Surface Pro line, and the Redmond, Wash. firm’s OEM (original equipment manufacturer) partners have followed suit with the same pitch for their devices. “That’s always been the case for Microsoft, since the Surface Pro came from the Windows side,” Milanesi said.

Apple has strongly hinted that it will adopt the Microsoft angle: iOS 9, slated to launch this fall, probably next month, includes features specifically for the iPad, like split-screen and a two-apps-side-by-side mode, that have been in Windows for years, and at the same time presage a larger tablet in Apple’s inventory.

“If you look at what Apple’s doing, it’s more and more focusing on the powerful part of the [iPad],” said Milanesi, ticking off the iOS 9 additions and the push into the enterprise through a 2014 partnership with IBM.

Not a hybrid
But while the broad strokes of a revised iPad approach may be similar to that of the Surface Pro, Milanesi expected that Apple will shun the “2-in-1,” “convertible” or “hybrid” labels that have dominated Windows-powered devices with attributes of both PC and tablet.

“2-in-1 sounds like you’re compromising something,” she said.

Apple CEO Tim Cook has repeatedly belittled 2-in-1s, most notably in 2012 when he compared such devices to a mashup of toaster and refrigerator. Cook has given no clue since then that he’s changed his mind.

Which was why Milanesi has put her bet on a larger iPad — “I don’t know if it will be 12-in. or not, but it will be bigger,” she said today — arriving this fall, sticking with iOS and forgoing an Apple-made keyboard, whether bundled or offered as an option. “Look at what they showed with the iPad, with the keyboard becoming a touchpad. To Apple, touch needs to be horizontal. They’re not interested in a hybrid,” she said in June after watching Apple executive Craig Federighi demonstrate iOS 9’s QuickType.

If Apple follows its now-standard format, it will hold an event in October to strut new iPads, including, Milanesi and others are convinced, a larger iPad that stresses power and productivity.

 

 


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