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Apple Failed To Revolutionize The iPad. So What?

This article is more than 9 years old.

Apple released new iPads yesterday, bringing thinner, faster models to market while keeping the old ones available at lower prices. With a remarkable 56 different models to choose from, you'd think the company could now satisfy nearly everyone. Except, of course, the insatiable technology press. Here's a sampling of the doom and gloom:

From Marketwatch:"Apple's New iPads Will Be A Hard Sell"

From Cnet: "Apple, Needing A Jolt With New iPads, Plays It Safe Instead"

From BusinessInsider: "There's No Reason To Think The iPad Is Coming Roaring Back To Life"

From the New York Times: "Apple’s iPad Problem: Does Anyone Really Need an Expensive Tablet?"

Let me save you some clicking. Apple's iPads are now an easier sell than ever. They start at just $249 and cover a ridiculous (and arguably confounding) array of price points including $299, $349, $379, $399, $429, $449, $479, $499, $529, $579, $599, $629, $699, $729, and $829. Like the Toyota dealer who can put you into everything from a Yaris to a Lexus sedan at the sister dealership across the street, Apple has you covered -- unless what you're after is a bargain tablet.

As for jolts, Apple probably would love to sell more iPads. But what the narrative of those last three articles fails to fully capture is that for all its ability to tap into customer wants and needs, Apple doesn't control the universe. It's been so successful selling iPads -- the total to date is actually now past 240 million as Tim Cook announced last quarter's 225 million figure yesterday -- that the majority of people who want one already have one. And those iPads are mostly still working, and mostly still useful. The mobile marketing platform Localytics published a chart showing that 35% of iPads in use are still first- and second-generation models.

While that might make them ripe for upgrade, it also points out that their users don't find it immediately necessary to do so. If they wish to purchase shiny new ones, Apple can certainly accommodate them. Phil Schiller, the company's marketing VP, was happy to show off that the new iPad Air 2 is less than half the thickness of the original iPad, a remarkable feat of engineering given that the original wasn't considered especially zaftig in its day. The new model also offers a clear upgrade in display quality and speed, which many will find appealing.

But that said, iPads are quite robust in their construction and seem to have a lifespan closer to computers than to smartphones. For Apple, that means there will ultimately be a replacement cycle but it likely runs 4-5 years rather than 2-3. No iPad has turned 5 yet and just 1 in 8 of the 240+ million out there was purchased more than 3 years ago.

Fortunately we haven't heard anyone suggest that Apple build lower-quality iPads to attract new buyers, but some of the doomsaying is nearly as absurd. "Apple events usually come with some "oooh" factor. But this launch is about the iPad's viability," said the Wall Street Journal's Brian Fitzgerald on Twitter.

Wait, what? Viability? Apple is still selling nearly every premium tablet on earth and 3/4 of all tablet usage occurs on iPads. Apple sure knows it can't force people to buy iPads if they'd rather use a different device, which is a major reason why the iPhone 6 Plus exists in the lineup. The company was initially skeptical of both the demand for smaller tablets and the demand for larger, phablet-sized phones. But then it plugged the first hole with the iPad Mini two years ago and the second with the 6 Plus last month. Apple now has screens of 4, 4.7, 5.5, 7.9, and 9.7 inches in iOS. Many rumors point to a larger model with a productivity focus coming early next year, too. That's three iPhones and likely three iPads. Not all will sell in equal quantities but then, no one should expect them too.

In the meantime, Apple's preeminent position in the larger tablet category, where the new iPad Air 2 sits, is barely touched, except by some occasional challenges from Samsung. It is with smaller sizes where Apple has been under assault from countless competitors that sell for as little as $99. To that end, it lowered the price of the Mini down to $249, an acknowledgement it has to compete more aggressively, yet also a continuation of its "affordable luxury" pricing style. Realistically, even at the new price the Mini will be squeezed, but not by low-end competition.

Benedict Evans of Andreessen Horowitz has attempted to analyze Android tablet usage and found that most seem to last about a year before disappearing somewhere. Apple isn't fearing cheap tablets, whether they're from Amazon, HP or a brand in Asia you've likely never heard of. Nor are they worried any longer about phablets; they sell their own. Oh, and that phablet starts at $749 before subsidy and likely will be replaced in 2-3 years. If you buy an iPhone 6 Plus and don't buy an iPad Mini, Cook and company will sleep very well tomorrow night.

Which brings us to Farhad Manjoo's central point in the Times: "But the iPad’s biggest problem is that it does not serve a distinct purpose in a world full of lots of other screens. I know many people who love their iPads, but I’ve heard from readers and friends who say their iPads just aren’t as useful as other devices they carry." We could just take this at face value because surely some people don't value their iPad as much as "other screens" but that's only a partial story. The same could be said of laptops for an increasing number of people, too. If you're not multitasking much and don't create documents or spreadsheets at home, is your computer as useful as a lean-back, touchscreen tablet with a near-endless battery that can also travel with you, is lightweight, can play three movies on an international flight and automatically backs up to the cloud with basically no user intervention? Probably not.

Manjoo suggested that Apple might want to "[give] the iPad a distinct purpose, a reason to exist that stands apart from phones and PCs." Jan Dawson, an analyst who runs Jackdaw Research had a slightly different take on the same issue. "There was nothing in today’s announcements which would convince someone who’s stopped using an existing iPad to buy a new one – the new iPads do the same things better, but don’t do anything dramatically new and different."

And there's something critical there: If the iPad had a unique "why?" more people would crave one. But the world doesn't work that way, and it seems unlikely Apple was ever going to care. It's been content for a long time to sell 4 million Macs or so each quarter in a world that sells upwards of 80 million PCs. Yet no one seems much bothered by the relatively slow growth of Mac sales in what has been a declining PC market. Instead, the iPad is a victim of its own success. The tablet market went from zero to superhero practically overnight and too many people thought this was "iPhone 2.0" for Apple -- another half-trillion-dollar success story that would catapult Apple's market valuation into the 13-figure range.

There won't ever be another iPhone-like opportunity for Apple. But iPad is a tremendous complement to iPhone and the iOS ecosystem. It leverages off the user experience knowledge, the back-end support, and the giant array of apps built for iOS to make them available to a broader class of users than the iPhone alone could ever hope to do. You have a generation of children learning "computing" on iPads and a growing portion of the workforce moving their old-school work to the platform as well.

What seems much more likely is that Apple keeps improving the iPad over time. Eventually, its performance is strong enough that apps shown off today by third parties to do photo and video editing increasing move from computers to tablets. A generation of millennials used to typing thousands of text messages a month without physical keyboards miss them less than I might. Tablets slowly but surely keep eating into the PC market even while smartphones and phablets keep eating into the tablet market.

When the Apple Watch ships early next year, the continuum of screen sizes will grow even smaller and whether or not the company ever brands its own TV, its presence in the living room means it's also moving up at the same time. Apple would like you to be using something it sells across that continuum, no matter where you are, for years to come. That's why it worked hard to get into autos with CarPlay and why it recently launched HomeKit and HealthKit to be at the center of your world in new, critical ways. iPad may not be the brightest star in Apple's sky, but it's a strong number two right now having come from nowhere just a few years ago.

It's irony that iPads was mocked as "just a big iPhone" when Apple will likely record record profits this holiday season for bringing to market "just two big iPhones." Oh, and one of those might dent the sales of iPad, which is just fine.

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