Apple just announced its financial results for fiscal 2014 second quarter ended March 29, 2014, and it has broken all previous records for revenue during the January-March quarter with revenues of $45.6 billion and profit of $10.2 billion which makes $11.62 per diluted share.
Apple was able to sell more iPhones than ever, as 43.7 million units were sold compared to Wall Street estimates of 37.4 million.
This is certainly a great, profit oriented financial results, with growth of sale in almost every product category, except one: iPads.
They were able to sell just 16.3 million iPads, compared to 19.2 million as expected by the Wall Street. During the same period last year, Apple was able to sell 19.4 million iPads. Compared to previous quarter (1Q2014) the sales fell by a whopping 10 million units. Technologists all over the world are now pondering over the question of iPad sales.
Has its popularity of iPads reached its saturation point?
Does it signify an even larger trend where iPads are going to be outclassed by Android based tablets?
Why iPad Sales Were Down?
During the earning call, Apple CEO Tim Cook attributed two main reasons for less iPad sales:
- Reduction in channel inventory this year, compared to increase in channel inventory last year
- The holiday quarter which ended last year had a backlog of iPad mini sales, which means that this quarter; there was a balance of demand and supply.
There was a time not too long ago when Apple cult members slapped each other’s back proclaiming that Apple would be one day called as the iPad company. Such was the optimism about this brand new product category that technologists had assumed that iPads will overtake iPhones very soon.
But the trend is showcasing something else.
Compared to last year, iPad sales have come down 3.2%. In 2012, Apple controlled 60% of the world’s tablet market, but by last June, it has fallen off to 33%, as per IDC. At the same time, Android now controls over 63% of the market, almost a role reversal within 12 months.
Last October, Apple tried to re-ignite the iPad wave by introducing iPad Mini with retina display and more features. But the sales haven’t actually picked up, if we ignore the holiday season mania where Apple makes its maximum profits.
What Can Apple Do Now?
The larger problem here, it seems, is that Apple is desperately trying to maintain its premium pricing inside a market which is being tempted by low-priced but equally shining Android tablets. Yes, Apple cult has it’s own standards and expectations, but the margin of profit gets considerably diluted when we observe that people are now using tablets which is economically feasible and full with essential features.
The other problem is features and usability.
As Apple’s lead designer Jony Ive describes, the Catch 22 problem. He says, “We’re often faced with a paradox when we design: To make products smaller and lighter, while at the same time more powerful. The more we reduce a product’s physical volume, the more difficult it becomes to increase its power and maintain its battery life. But if we can overcome these challenges, we can make something without compromises.”
It is upto Apple’s upper management to take a call now on these issues, which is actually hampering the growth of iPad. Maintaining quality and market standard, while at the same time making profits and pleasing the Wall Street; Apple needs some drastic measures now to keep iPads floating.
What according to you is the need of the hour for Apple?
How can they increase iPads sale, without damaging their brand name? Do share your views by commenting right here!
I still don’t think tablets have caught on quite yet, especially in India and other Asian Markets. Whereas everyone is using smart phones worldwide, people in in the developing world don’t yet see the need for tablet computers.