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The iPad's expected ebb, and the search for why

Gregg Keizer | April 23, 2014
Apple is expected Wednesday to confirm Wall Street's fears, that iPad sales growth not only slackened in the March quarter, but reversed course with fewer of the iconic tablets sold than the year before.

Ben Bajarin, an analyst at Creative Strategies, also noted, to use Singh's word, a "cyclicality" in consumer electronics, the iPad included, in the fourth quarter of the year. That's when sales, especially in the U.S., boom because of the holidays.

iPad sales growth has slowed significantly in the last year, even as Apple has set new records. But Wall Street always wants more. (Data: Apple.)

But he also had another explanation for the "why" that painted the situation with a bigger brush.

The reason for the iPad's current troubles, if that's the word, lies in its immediate past, Bajarin argued, when sales exploded in 2011 with year-over-year growth rates in triple digits. That growth, clearly unsustainable, was due as much to external factors as to the iPad itself.

"A perfect storm happened in the PC industry," said Bajarin. "The iPad came out right as a refresh cycle hit, but with the iPad, people became aware they didn't need to refresh [their aged PCs]." Instead, they discovered they could spend the money on a new device, the iPad, that promised simplicity.

"And this Windows 8 debacle hit around the same time," said Bajarin, referring to the cold reception that greeted Microsoft's newest OS in 2012.

The one-two punch put the iPad on the road to impressive sales. "Something exists between the personal computer and the smartphone, and Apple created a computer that in essence meets consumers where they are," Bajarin said. "A PC is overkill for my grandma, for my wife. They've said they don't just want an iPhone but they also don't want a Mac."

Gasse talked about that tweener spot for the iPad as well, and referred to former Apple CEO Steve Jobs' comment at the tablet's introduction that the new device would have to "find its place between the iPhone and the Mac."

But where Gasse argued that the iPad, to continue to grow, needed to grow in functionality — he seemed to imply that for it to further cannibalize PCs it had to become more PC-like, a "Surface-ization" of sorts — Bajarin was bullish on the tablet as it was and is.

"The idea of the iPad is that something exists between the phone and the PC," Bajarin said. "In reality, I think we're seeing that take shape. But people are trying to figure out what that means. It's not a device that's always with you, but it's also not a super heavy personal computer."

Saying he was "extremely optimistic" about the long-term prospects of the iPad, especially in its larger sizes, Bajarin conceded that there are many aspects of tablets that had yet to solidify, including how they would become the next computing platform, the successor to the traditional personal computer. But he contended that the current slowdown is natural. "When we see the dust settle, tablet [growth] may slow in many of the same ways that PCs have — become a trickling growth," Bajarin said.

 

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