Apple's problem, as Milanesi sees it, is what to do going forward, especially if, as most expect, the company unveils one or more larger-screen iPhones this fall.
Ben Thompson, an independent analyst whose Stratechery website has become a must-read for many in the technology industry, agreed. "Even giving Cook the benefit of the doubt (and you should, in this case), there's no question the iPad is flat lining," Thompson wrote this morning in a note to paying subscribers. "It's fair to wonder how much a larger-screen iPhone will cannibalize sales going forward."
The iPad is already eating its own, Apple's sales data hinted yesterday. The iPad's ASP (average selling price) for the March quarter climbed by $25 to $465, a 6% increase compared to the quarter that ended Dec. 31, 2013. That seemed to show a lean toward the more expensive iPad Air, and away from the cheaper iPad Mini. The latter is, analysts have said, most at risk from cannibalization by iPhones with larger screens.
But for all the doom and gloom about the iPad's future, Milanesi asserted that Apple is not the only tablet maker dealing with a slowdown. According to researcher IDC, tablet growth will slow to about 19% this year, dramatically down from 2013's 52% rate. "This is an industry issue," Milanesi said.
And Apple has the luxury of flexibility in how it moves forward with the iPad because of its industry-leading ASP, the volume of its sales — even if that volume has shrunk — and the profit margins it makes on those sales.
"The question now is 'What else are they going to do?'" Milanesi said.
iPad sales declined year-over-year in the March quarter, the second time Apple's seen growth flag but consistent with a significant slowdown in the last seven quarters compared to extreme increases in 2011 and early 2012. (Data: Apple.)
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