When it comes to Apple’s iPads and iPhones, it’s not only the size of the screen and the ability to make calls that separates one from the other. It’s the fates of the devices, too.
Bigger Apple phone, bigger orders
Apple is making 70 to 80 million units of its new larger screen iPhone, up from the 50 to 60 million it made of the current 5s and 5c models.
Sales of the iPhone continued to grow strongly in the three months to June 28, Apple reported in its quarterly results, despite the looming prospect of a much bigger, better iPhone 6 that by all rights should have had consumers holding off their purchase.
Apple sold 35.2 million iPhones around the world last quarter, up from 31.2 million a year ago.
But the iPad hasn’t been so favoured. Sales were down last quarter by 9 per cent compared with a year ago, meaning Apple sold just 13.3 million iPads, about a million fewer than analysts had been expecting.
The iPad is now so out of favour that Apple CEO Tim Cook didn’t mention it in his statement.
“Strong sales of iPhone and Mac and the continued growth of revenue from the Apple ecosystem” were behind the record June-quarter revenues of $US37.4 billion ($39.8 billion), and quarterly net profit of $US7.7 billion, he said.
Telsyte analyst Foad Fadaghi said the slowdown in iPad sales was the biggest worry in the results, due to Apple’s expectation that growth will continue as tablets gradually overtake traditional PCs in market share. It appeared customers were holding on to existing iPads longer than they do with phones, where upgrades were more frequent due to phone plan changes.
“iPads continue to decline following a very strong previous couple of years,” Mr Fadaghi said.
“We are revising our upgrade or replacement cycle estimates for iPads, given the longevity of older iPads such as the strong-selling iPad 2.”
It’s not just the fact that old iPads keep working that’s discouraging people from buying new ones. Serious competitors to the iPad had been slower to emerge than competitors to the iPhone – Apple is still number one in tablets, if only just, but it lost its number one spot in phones in 2012 – but they have come out of the woodwork this year, with Samsung, Microsoft, Sony, Google and others all producing worthy, and often cheaper, tablets.
Microsoft says its Surface 3 Pro tablet, which competes with the iPad as a PC replacement, has enjoyed much more success than previous Surface Pro tablets did, though Microsoft chief financial officer Amy Hood cautions it’s still too early to tell how well it will sell.
James Turner, an adviser at Intelligent Business Research Services, says it’s inevitable that Apple’s products will drift away from the number one spot.
“Apple faces a choice now. Apple can follow the market and respond to every flick of the windsock of market demand, or it can stay true to its original purpose, which was to build the best devices it could. If Apple stays true to that original purpose, I expect that it will only ever maintain a small percentage of the market, but it will probably be the most profitable part of the market.
“[But if it enters] the mad arms race of trying to give consumers everything they want from one minute to the next, then Apple will become irrelevant because it will be trying to compete against a vendor – Google – that gets its money very differently.”