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Apple CEO Tim Cook on why he’s still optimistic about the iPad despite significant decline in sales

(Credit Quartz)

Tim Cook has once again defended the iPad in the face of continued falling sales, arguing that the “underlying data” paints a more positive picture than the pure sales numbers, and predicting that there will be future iPad growth.

As Quartz noted, the 23% year-on-year fall in iPad shipments to 12.6M means that iPad revenue actually dropped below Mac revenue for the second time since 2011. Cook again acknowledged that other Apple products cannibalize iPad sales, the iPhone 6 Plus a strong competitor on one side and the MacBook Air and new 12-inch MacBook on the other, but said that there were a number of reasons to be positive about the future of the iPad … 

First, he said, the partnership with IBM is still in its early stages, but is already showing great promise. First-time buyers also make up a high proportion of sales, suggesting future upgrades likely down the road, and intent-to-buy numbers are also great. The iPad also hit a new quarterly record for sales in China. Cook also made his usual comments about the iPad topping the tablet stakes in both customer satisfaction and usage.

Cook said that Apple was continuing to invest in the iPad “product pipeline” as planned, and that while he wouldn’t predict when iPad sales will return to growth, he “strongly predicts” that they will.

The reference to the future product pipeline almost certainly refers to the long-rumored 12-inch iPad ProBloomberg reported last month that the larger tablet aimed at the education and professional markets had originally been targeting an April to June launch but has now been pushed back to September.

There have been various rumors about how the iPad Pro might differ from existing models, suggestions including both an optional stylus and ports that would allow a keyboard and mouse to be connected.

There was, however, some skepticism from analysts, noting that Cook made the same arguments last time around, and Bernstein’s Toni Sacconaghi observing that the consensus view is that Apple will ship more Watches than iPads in the next two quarters, despite very constrained supplies of the Apple Watch. Cook responded simply by saying that he was “thrilled” with response to the watch, and no more should be read into it than that.

John Gruber did draw my attention to one final piece of good news for the iPad in Quartz‘s excellent set of slides – albeit one that may not last much longer. If you measure cumulative shipments by months since launch, the iPad is still, for now, doing better than the iPhone did.

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Comments

  1. Arnold Ziffel - 9 years ago

    iPads work for a long time, e.g., my wife has an iPad 2 we bought the day they were released for sale, and she’s perfectly happy with it to this day. Longevity is similar to a notebook.

    • Willy (@Willy_tr) - 9 years ago

      I agree, my dad still has my ex iPad 2 and it works just fine for him, i upgraded it just for the display quality but if you don’t mind it is still ok after 4 years

      • J.latham - 9 years ago

        Same here old iPad works fine. It’s a little on the slow side but I don’t use it very often (maybe once every month or two) so no real need to upgrade.

    • pdoobs - 9 years ago

      not only do they last forever but they are pretty easy and cheap to repair. i’ve personally replaced 2 screens on ipad 2s and my non-techie brother replaced a screen. my in-laws are still very happy with the ipad 2 they have since it’s basically a youtube and facebook device.

    • drhalftone - 9 years ago

      My wife still uses our first iPad, and I did purchase an iPad mini for myself. But I haven’t used either ever since I got an Surface Pro 3. I purchased it because I just couldn’t find a stylus that worked across all of my drawing Apps. The SP3 is amazing, and MS does deserve credit for all that goes into this thing. That all being said, I would easily transition to a 12″ iPad if it had a fully integrated stylus just so I could stay within the Apple eco-system of sharing resources across all of my devices.

      • Jay (@BlueJayL) - 9 years ago

        Considering how bad stylus support is for the iPad Air 2, it might take a long time to see really good stylus support for a 12″ iPad (unless it’s built-in & included by Apple). I am looking forward to seeing what Microsoft comes up with on the Surface Pro 4 — thanks for the owner’s opinion on the SP3.

    • Tony L (@tonyl) - 9 years ago

      I think that is the main thing…they really do last a long time, in terms of how long the GPU/RAM/storage holds up to increasing standards and due to its great build quality.

    • standardpull - 9 years ago

      I agree. I keep my Macs for a long time. I don’t see why I can’t do the same with my iPad.

      As for my phone, the industry tech has been evolving extremely quickly: iPhone 1st generation to now has seen incredible feature additions. Their replacement rate will fall once upgrades become more … nuanced.

  2. But still, iPad doesn’t have the same refresh rate as the iPhone. It is much more like the Mac in this regard (a 3+ years cycle).

  3. J.latham - 9 years ago

    The iPad is an interesting product as far as design. I feel as if it is sold to people who want to do things computers can do but don’t like “computers”. Things like elderly, children, and people who would describe themselves as not “techie”. I’m not saying there aren’t power users out there that have it or really like it, but I wouldn’t call them a majority. I would imagine that as time goes on and notebooks get thinner there will be a very small margin of people find the iPad more convenient. Makes me wonder how seriously Apple may be looking at a merger between a Mac Book and iPad Pro because there target market seem to be getting closer and closer.

    • rettun1 - 9 years ago

      I think they’ll have to make a procduct like that eventually. They has better hurry up and make it in my opinion. But itll be hard to get away from the rhetoric they’ve been using (ie ‘toasters and refridgerators’)

  4. rogifan - 9 years ago

    Who cares about iPads when they’re being cannibalized by higher margin iPhones and Macs?

    • alvinguzman - 9 years ago

      Exactly and that’s what Tim said – zero worries if people keep buying the 40%+ margin product. Also the fact the product is so good is the reason for the long upgrade cycles – not because there is anything wrong with it

  5. lkrupp215 - 9 years ago

    The iPad has found a niche in the Enterprise. I think that and the health industry will be the iPsd’s future. My family doctor lugs around a laptop from room to room. He’s always complaining about it. Perfect roll for the iPad.

    • iphonery - 9 years ago

      I’m in the medical tech field and your comment couldn’t be more right. In fact, I have a meeting next week with a 3rd party company that want’s to demo their iPad connectivity software that takes older medical device’s patient vital data and sends it to their EMR(Electronic Medical Record) automatically.

      If you think the Apple “Tax” is high, the Medical “Tax” is even crazier! With Apple venturing into the medical field, I can see them disrupting the industry for the better. A bedside monitor can cost between $2500-15,000! I can see a $500 iPad, connected to a vitals module, replacing a bedside monitor for the display and processing power for the patient vitals. That alone is a 5-30x cost reduction on one device!

  6. iPhone 6 Plus slowed iPad growth in a huge way. Even iPhone 5. I remember Steve’s slide of MacBook and iPhone 4 and the iPad in the middle. The more iPhone grew in size, the less sense it made.

    • charilaosmulder - 9 years ago

      I think where iPad shines is iPad specific productivity and creativity apps that simply aren’t available on the iPhone, as well as much faster (10 finger) typing in landscape mode. The iPad mini though is a product I believe has no reason to exist since it was first introduced.

  7. jamessmooth - 9 years ago

    Because Tim Cook knows something we don’t know! (new iPads and hopefully an iPad pro coming in the fall is what he knows :)
    For me, there was no reason to upgrade from my iPad Air to the Air 2. However, if a pro model comes out, I’m going to upgrade. I use mine for work every day.

  8. Ryan Brooks - 9 years ago

    I’d much rather have a quality product than a disposable one. The investment in product innovation is so consumers can gauge their intent to upgrade. I for one was waiting for a retina screen. I have it now so I see no reason to upgrade. It performs well for what I need and I love using it. Thinner and lighter is nice, however its when I really start loosing software support and more iOS features I consider an upgrade.

  9. Tamal (@tamalm) - 9 years ago

    Just google “iPad won’t turn on” and you will know why sales are declining. Also, iOS for iPad always been 2nd class citizen. Apple never took iPad seriously.

    • Isiah Johnson - 9 years ago

      ‘iPad won’t turn on’ is not why sales were declining. That search is not even newsworthy. There is no defect going around. Google ‘iPhone won’t turn on’. You’ll get the same results yet Apple selling almost every one they manufacture.
      I’m sensing you had a problem with your iPad, correct?

  10. jimgramze - 9 years ago

    The only reason I upgraded from the iPad 3 to the iPad Air was to simplify my charging cables to be all Lightening. If and when USB-C takes over that will be the time up upgrade everything.

  11. Chris Cicero - 9 years ago

    iPhones get replaced every two years like clockwork, or when they are broken, due to being used non stop at least 18 hours per day. iPads just last longer. My iPad mini passed to my brother when I got my iPad Mini Retina…. Mini is like 3 years old…going strong. Will become my Moms when I get a new one. 4-5 year replacement cycle on iPads?

  12. hungarianhc - 9 years ago

    I think iPads are more like computers. My mother uses her iPad instead of a computer, and she upgrades it about once every three years. Yes – the mac is “growing” and the iPad isn’t, strictly in terms of this quarter vs. this quarter one year ago, but they also sold 3x as many iPads as Macs… so to me, it absolutely makes sense to keep pushing this category, especially if Android tablet makers are starting to drop out of the race… Now is the time for Apple to just stay the course and dominate that segment of the market.

  13. Cameron Lazzari - 9 years ago

    Well it could be because the upgrades were so minor on both the mini and the air. Nobody is gonna upgrade cause it is a little faster and has a fingerprint sensor.

  14. bennynihon - 9 years ago

    besides the less frequent upgrade cycle and cannabilization by their own products, the tablet has largely become commoditized. even someone who’s married to the Apple ecosystem with iPhone and Mac, could conceivably do just fine with a $100 Android tablet, since many use a tablet strictly for web browsing

    • bennynihon - 9 years ago

      and I forgot to mention that the lack of subsidies (such as those they receive from cell phone carriers) encourages those that may own an iPhone as their only Apple product to get a cheaper tablet alternative

  15. philboogie - 9 years ago

    My next iPad is going to be a MacBook. When the iPad came out I loved that it would ‘be booted up already’ when I pressed the Home button. But with todays’ SSD in MacBooks they work just the same; open up the lid and it’s booted; instantly usable.

    The shitty experience I get when trying to post on a forum from an iPad made the decision for me. As I only use my iPads for browsing, reading and email I think in my case a MacBook is a better choice. YMWV, no doubt.

    • Ben Lovejoy - 9 years ago

      I think you won’t be alone in that choice. For me, the built-in LTE (vs tethering, which kills the iPhone battery) plus genuine 10-hour battery-life means the iPad wins out, but I can see quite a few people following your example.

    • This could be solved with a simple iOS update allowing users to select a display preference in Safari, either loading mobile or desktop version of websites.

      • Tom Fenske (@tomfenske) - 9 years ago

        This already exists. Tape the Address Bar when you’re in a site, and pull down from the Favourite pane.

  16. I think Apple needs to make a serious shift in their iPad offering. They have to overcome the success of their previous models in order to entice customers to upgrade. Thinner, lighter, better battery, camera, screen and speed. These don’t appeal to the majority of iPad users. Young children of tech savvy parents and the elderly of tech savvy kids.

    I think there are three things that could be done to help widen the iPad customer base, and increase product turnover. 1) Storage. 32GB, 128 and 256 should be the three sizes offered. In the same way the capacity drove 2nd tier iPhones, and an extra $100 dollars from customers pockets – this too will drive upgrades from those constantly removing content from their iPads to make room, and more of those upgrades will be to the 128GB for the ‘inherent’ value. 2) Cost and Connectivity. Simplify the lineup by only offering 4G iPads, but reduce the cost by $130 so that 4G model prices are in line with current WiFi only models. Then include the Apple SIM on these, allowing customers to connect and disconnect as they please. This adds functionality while reducing cost – which customers always like. Current WiFi only owners frustrated with the drawbacks of WiFi will be tempted to upgrade for the ability to use data on the go without the commitment. 3) Subsidize. Offer new 4G (the only iPad) iPads through carriers, locked on term contract and subsidized. A $499 iPad with contract will go for $199 – which expands the base of iPad users to those who can’t afford to pay in full upfront. Carriers could also offer bundles where an iPhone and iPad are sold on contract at the same time, offering a discount for buying together, or even offering the iPad for free. Applying the cellular model, they could even offer last years iPad for $99 on contract to further expand the user base.

  17. Isitjustme - 9 years ago

    Toni Sacconaghi – isn’t this is the guy who said Apple was making up the numbers of the launch of the first iPhones by including those that are stored in warehouses allover the US.

  18. Tim is still optimistic about iPad sales because in order to get a decent Mac laptop you need to spend $1299ish. In this day and age there should be a $999 MacBook Whatever for all. Instead he’s going to introduce an iPad (Surface) Pro with trackpad/mouse support for $799. That’s why he’s optimistic.

  19. Dan Kennedy - 9 years ago

    I was all ready to buy an iPad mini 3, but then all they did was add on a fingerprint sensor. So I didn’t purchase it, and instead am waiting for a more significant upgrade. I know that doesn’t explain the drop in iPad sales, but if they want to boost them, they’re gonna have to do better than that.

  20. Mark Fuller (@kcwookie) - 9 years ago

    I would love to get a Macbook, but I don’t need one because I have an iPad Air 2. I have a MacBook Air, but it gathers dust. My iPad is my workhorse. With Parallels, I can even use it as an interface for my iMac. The iPads problems is that it is too well designed and built. It last for a long time; to me, that’s not a problem.

  21. ericisking - 9 years ago

    clearly this is all about expectations – iPad upgrade cycles are not the same as iPhone cycles, and so the business will forever be as cyclical as the PC/Mac business (which is highly cyclical, meaning that the only way to consistently post growth is to gain market share). Apple already had a huge market share, so growing that share was always going to be difficult, and hence they’re at the mercy of the cycles until the market settles down and they can start to win share from Microsoft and Android (if they innovate…). Also, important to note that they are still selling way more iPads than Macs – that seems to get lost in the focus on revenue rather than units. iPad is a lower-cost product, but the numbers still suggest that there is a gradual replacement of traditional PCs/Macs with iPads. All the talk of Mac revenue overtaking iPad revenue seems to have been played in the media as a sign that the post-PC era was a lie – but the opposite is the case, tablets are still cannibalising from PC sales (just not as quickly as 2 years ago, and not as quickly as some analysts foolishly predicted). 5 years from now, iPads will make up a bigger, not smaller, share of overall computer shipments.

  22. neonspark22 - 9 years ago

    so they are too big to be portable and people rather have a big (but smaller) phone. And they are too clumsy to replace a notebook so people are going for that instead….

    One may say the ipad is like a…hmm toaster-refrigerator? :)

  23. leicaman (@leicaman) - 9 years ago

    Just bought a new MacBook (Space Gray, 512 gig). Amazing little laptop that makes me think I would keep my iPad for two more years than I had planned. Though I have to admit that after bending it when I sat on it, I kind of think I might replace it sooner than I would have otherwise. :-)

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Avatar for Ben Lovejoy Ben Lovejoy

Ben Lovejoy is a British technology writer and EU Editor for 9to5Mac. He’s known for his op-eds and diary pieces, exploring his experience of Apple products over time, for a more rounded review. He also writes fiction, with two technothriller novels, a couple of SF shorts and a rom-com!


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