Ben Thompson, an independent analyst who covers technology on his Stratechery website, put it plainly. "Clearly the iPad has hit a wall, and I suspect the issue is the replacement cycle," Thompson wrote (subscription required). "iPad growth has been driven by new customers, but as Apple has saturated the (smaller) market of people who want a third device, there has not been a wave of upgraders to pick up the slack."
Early assumptions that most tablet owners would replace their devices every two years -- misguided as it turned out, because tablets are not smartphones, which do turn over every two years on average -- proved wrong.
"The replacement cycle for tablets is definitely longer than for smartphones, because most tablets are not on a carrier contract," said Carolina Milanesi, chief of research at Kantar Worldpanel ComTech, referring to the smartphone subsidies prevalent in the U.S. that reduce consumers' out-of-pocket expenses when they pick up a new handset.
Dawson estimated that the typical iPad owner upgrades to a newer model closer to every three years than every two. Others, like Thompson, equated the iPad's problem to that of PCs, which have also had longer replacement cycles.
Other factors play a part in the longer iPad replacement cycle, said analysts interviewed by Computerworld, including robust design, an active ecosystem that provides apps which run even on older models, and Apple's lengthy iOS support policy. For example, iOS 8, which will launch in September, will run on every iPad Apple has produced except for the 2010 original, including 2011's iPad 2.
Another case some analysts have made is that tablets, unlike smartphones, are a luxury, even in developed markets like the U.S., and that because their owners spend less time on tablets than with their phones, they are less motivated to upgrade regularly.
Even the way Apple markets the iPad works against frequent upgrades, said Benedict Evans of venture capital firm Andreessen Horowitz. "The iPad paradox: by making specs irrelevant, and selling to people who don't want to have to care, it makes it harder to sell upgrades," Evans tweeted Tuesday.
In other words, as Apple boosts the hardware specifications for new iPads -- this fall's model will probably have an Apple-designed A8 system-on-a-chip (SoC), a presumed step up in performance from last year's A7 -- iPad buyers simply won't care. Unlike PC buyers of, say, a decade ago, they're not driven by increases in processor performance to buy the newest shiny.
"The days of spec marketing are over," said Baker, referring not just to tablets, but also to personal computers. "Let's face it, I have an employee with an [original] iPad and she's perfectly happy with it. So the changes from one iPad to the next are not hugely compelling to people."
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