Apple, Inc.'s iPad Isn't Living Up to Its Potential

Apple's competitors are tapping the professional tablet niche, and it's time the iPad did the same.

Mar 4, 2014 at 9:35AM

Ipad Pro Prediction

The current iPad lineup is missing something. Source: Apple.

The iPad has sold like gangbusters since it was first launched, but as tablets have become nearly ubiquitous Apple (NASDAQ:AAPL) and its competitors are looking for new ways to tap existing markets. Samsung (NASDAQOTH:SSNLF) is looking to the professional tablet niche to grow its market share, and it's time Apple did the the same.

Room for improvement
The latest Gartner research shows the Android OS experienced 127% growth in 2013, and now holds 62% of the tablet market. Meanwhile, Apple's iOS dropped from 52.8% tablet share in 2012 to 36% in 2013.

Galaxy Tab Pro

Galaxy Tab Pro. Source: Samsung.

Despite the drop, Apple isn't necessarily in trouble. The iPad maker had an incredible calendar fourth quarter, selling a record 26 million iPad and iPad Minis. That number is up from 22.9 million year over year.

But despite Apple's recent quarter, there's still some room for improvement. In 2013, tablet growth in emerging markets was 145%, while mature markets eked out just 31%. Apple isn't likely to release a low-cost tablet anytime soon, so instead the company needs to find new ways to get saturated markets to buy new versions of the iPad. And achieving this might be as easy as following the competition.

Last month, Samsung launched pro versions of its Galaxy Tab and Note tablets. The largest-sized 12.2-inch tablets are supposed to be more productive versions of the non-pro lineup, and function as a computer replacements for some. But whether Samsung's new pro line lives up to this ideal or not isn't quite the point. Samsung has helped fill in a niche market that only has one other serious competitor right now, and it's not Apple.

Microsoft Surface Pro

Surface Pro 2. Source: Microsoft.

Microsoft (NASDAQ:MSFT) is arguably the first company in the pro tablet space. The Surface Pro, which launched last year, and the new Surface Pro 2 both are touchscreen tablets that run full versions of the Windows operating system. Despite the initial lackluster sales of the first versions of the Surface lineup, Microsoft's tablet revenue more than doubled this past quarter, sequentially.

While Microsoft holds a minuscule 2% of worldwide tablet market share right now, there's a serious case to be made for its Pro lineup that run full versions of Windows programs.

For many people looking for a computer replacement, the Surface Pro and the Samsung's Note and Tab Pro capabilities make them the best, and only, options right now.

Unless Apple decides to change this.

Beating the competition at its own game
While it's arguable that Apple's iPad Air is already professional-grade, the company could benefit from increasing some of the Air's capabilities and launching an iPad Pro later this year.

Samsung is the No. 2 tablet vendor right now and experienced 336% tablet growth this past year. Those are two things Apple can't ignore. 

Here's what Gartner had to say about Samsung's growth:

The expansion and improvement of its Galaxy tablet portfolio, together with strong marketing and promotions, helped Samsung shrink the gap with Apple. In line with its smartphone approach, Samsung's oversegmentation of its tablet portfolio helped it to offer a wider size and price choice but also helped it to test the market and find niches.

Samsung and Microsoft have tested out new markets, and now it's time for Apple to swoop in and build out those potential markets.

Apple has hinted (possibly) to a forthcoming iPad Pro release with its new 64-bit "desktop" architecture in the iPad Air, challenging developers to create apps that are just as capable as desktop programs. Another hint came when Apple decidedly kept the iPad 2 around when it launched the Air. The company typically has two versions of its devices, not counting screen sizes. Think iPhone 5c and 5s, iMac and Mac Pro, MacBook Air and MacBook Pro, and eventually the iPad Air and iPad Pro.

With the company's solid fiscal first-quarter iPad sales, Apple isn't currently in any tablet danger, but it's missing a new niche by not selling pro versions of the iPad. And with Samsung quickly growing its tablet share, and firmly in the pro tablet space, investors should be looking for a professional-grade tablet from Apple later this year.

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Fool contributor Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple. It recommends Gartner and owns shares of Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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