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As tablet growth slows, Apple may face a year-long iPad sales contraction

Gregg Keizer | Sept. 1, 2014
Does CEO Tim Cook's assertion that 'significant innovation' is in the cards herald a 12.9-in. iPad?

It's unknown what Cook has up his "significant innovation" sleeve for the iPad that could boost sales. Analysts expect Apple to unveil new models this fall, if only because that's what the company has done the last two years. But unlike the iPhone -- which has suffered a steady stream of leaks as a preface to its Sept. 9 event -- there have been few hints about what those new tablets may be.

Nor is Apple likely to dramatically lower prices to play in the bands where tablets are selling the best: Asia. IDC forecast a 10% decline this year in ASP (average selling price) to $302 for all non-U.S. markets. By comparison, the iPad's ASP in the June quarter was $444. Nor have there been any clues that Apple will launch a tablet capable of making and taking voice calls over a cellular network, a category that IDC said accounted for 25% of all tablet sales in Asia during the second quarter and was on track for a year-over-year growth rate of 60%.

Instead, the speculation that has emerged has been about a larger-sized iPad, one with a 12.9-in. screen. Talk of such a device, of course, goes back years, but was reignited by a report last week by Bloomberg, which cited "people with knowledge of the matter" to claim that suppliers were preparing to produce a larger iPad, with manufacturing starting in 2015's first quarter.

A 12.9-in. iPad, if partnered with a keyboard, could conceivably compete with traditional notebooks for productivity chores and be attractive to businesses, the theory goes. Apple's recent partnership with IBM, years in the making, according to Cook, may have been a driver for such a tablet. But Microsoft has pursued the same line of reasoning with its Surface Pro tablet to limited success.

And a so-called "2-in-1" has been denigrated by Cook, called "a toaster and a refrigerator" at one point, "a car that flies and floats" at another. Cook hasn't mocked the form factor since 2012, however.

If Cook does have "significant innovation" for the iPad in mind, eating words may be a small price to pay.


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