Apple's iPad Business Continues to Slump

July 27th, 2014
in News, econ_news, syndication

by Felix Richter,

On July 22 after market close, Apple reported results for the third quarter of fiscal year 2014 that were in line with people's expectations.

Follow up:

The company raked in a net profit of $7.75 billion on revenue of $37.43 billion. iPhone sales increased by 12.6% thanks to a strong perfomance in emerging markets and even Mac sales made a strong comeback, growing by more than 17% over last year's third quarter. The only disappointment came, once again, from Apple's iPad business.

iPad sales declined by 9% year-over-year, dropping to the lowest level since the second quarter of fiscal 2012. Apple's tablet sales have now declined in three of the past five quarters, with the only significant growth having been achieved in last year's holiday quarter when the iPad mini with Retina display was released.

There are a number of reasons to explain the iPad's disappointing performance. For once, the tablet market as a whole isn't growing as quickly as analysts expected. The emergence of phablets has probably a lot to do with it, as phablets undoubtetly serve as a substitute for small-screen tablets such as the iPad mini. Another reason for the tablet market slowdown is probably the fact that tablets are rarely subsidized by carriers, making them more expensive and making upgrade cycles much longer than they are for smartphones.

So does Apple need to worry? Not too much probably. Unless every analyst and Apple commentator is wrong, Apple will release a larger iPhone later this year, meaning it will get a piece of the growing phablet cake and replace some of the lost iPad sales with iPhone sales. If that is the case, Apple's bottom line could even improve, because iPhones are sold at much higher margins than iPads are.

This chart shows Apple's quarterly iPad and iPhone sales since the iPad's release in 2010.

Infographic: Apple's iPad Business Continues to Slump | Statista
You will find more statistics at Statista


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