30 October 2014

The iPad and the ‘post-PC’ era

Last week it was time for another earnings report from , which delivered little surprise: big revenues from the new larger iPhone models, while iPads recorded the third consecutive drop in sales. Half a year ago, after the first signs of stagnation, I shared a chart comparing the year-on-year growth of Apple products and commented that, in just two years, the iPad has gone from being the iPhone to being the Mac – meaning of course that growth has stalled abruptly, turning the iPad from the hottest selling Apple device into a stagnating product like PCs. Not much has changed since, except the Mac is showing signs of renewed consumer interest with healthy growth in both revenues and unit sales.

Apple unit sales YoY growth

About the same time, six months ago, I wrote an article about how, with larger iPhone models, Apple will likely cannibalize the iPad. The conclusion seems valid still, with the added observation that the Mac could be eating into the iPad as well, for people looking for a less restrictive experience. The average selling price for the iPad, also in steady decline for the past two years, supports the idea: smaller ASP can be caused by people choosing to buy the iPad mini (or older, cheaper models). But the smaller iPad is more likely to become a collateral victim of the iPhone 6 Plus, so this could accelerate the decline for Apple’s tablet business.

Apple iPad quarterly unit sales and ASP Apple iPad and mac quarterly unit sales and ASP
Comparison of iPad quarterly unit sales and Mac&iPad combined sales. Left axis shows sales in thousand units, right axis ASP in $

A popular narrative among Apple analysts (although most of the times ‘fans’ would be a more appropriate description) is that the iPhone and iPad are ushering a bright new ‘post-PC’ future. We’re reminded that, no later than during 2014, the sales of Apple devices will surpass Windows PCs – as if that alone would somehow make the world a better place. Another popular conception is to compare sales of PCs with the combined sales of Mac and iPads (and sometimes iPhones) – it has to be, otherwise Macs would never be comparable with Windows volumes. These recent numbers show that devices can also struggle with growth and reach saturation. It’s not just the iPad, the combined unit sales for Macs and iPads for the last three quarters are also in decline – like the PC market as a whole. In a sense it confirms that iPads are like PCs, just not in the way that Apple fans imagined.

Finally, there’s the big problem: storage. How does someone on a iPad access all of the photos and music and video and other files that are part of the modern digital life that Apple wants us to lead? None of us can be post-PC until all of our stuff is where we can get at it without a PC. That there’s been no clean, obvious, and reliable solution to this problem is definitely Apple’s fault, and it’s kept the iPad from being a complete PC replacement.

Dr. Drang

Personally, I think the term ‘post-PC’ is poorly chosen and inappropriate. The processing power available in current smartphones is huge compared to desktop PCs from a decade ago, so it’s clear to me that these are personal computers in their own right. Instead of being replaced, over the years the PC has diversified and adopted a wide range of shapes and sizes. The main differentiation remains the input method: smartphones are specialized in touch and increasingly voice control; tablets can be extended with optional keyboards; ‘classic’ PCs have mouse and keyboard, while the new laptop-tablet hybrids can use any of these. We may live in a post-Windows era, but the PC is fine and thriving and I think these is still a long way to go until we see the end of the PC revolution.

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