Why Apple's iPad Is in Big Trouble

Less than two years ago, Apple's (NASDAQ: AAPL  ) iPad absolutely dominated the tablet space. As of mid-2012, Apple still claimed nearly 70% of the tablet market, while Android tablet manufacturers were struggling to make any headway.

Furthermore, the iPad Mini's fall 2012 arrival was an open secret by then. As a result, tablet market analysts expected Apple to further solidify its dominance of the tablet market over time.

The iPad Mini was supposed to solidify Apple's dominance in the tablet market. (Photo: Apple.)

However, the opposite has occurred. Not only has Apple's market share lead crumbled, but iPad sales growth has also come to a crashing halt. Tablet rivals such as Amazon.com (NASDAQ: AMZN  ) and Samsung are gaining momentum by closing the quality gap with Apple and offering lower price points. Unless Apple can deliver vastly improved iPads later this year, the iPad's growth days are over.

Where did all the iPad buyers go?
It's hard to imagine right now, but just two years ago, Apple was growing iPad revenue by more than 60% and iPad unit sales by 80% -- even without an entry in the growing 7- and 8-inch tablet market! Last year, despite the addition of the iPad Mini, unit sales growth slowed to 22%.

Furthermore, Apple introduced the iPad Mini at a lower price point to combat cheap tablets from Amazon.com and other vendors. This led to a sharp drop in the average iPad selling price. As a result, iPad revenue grew only 3% in FY13. While iPad production costs are falling, it's safe to say that with iPad unit sales growth outpacing revenue growth 22% to 3%, iPad margins dropped dramatically.

iPad revenue growth did tick up to 7% last fall on a 14% increase in unit sales. However, that may prove to be Apple's best quarter of the new fiscal year. Demand appears to have fallen off a cliff after the holiday season.

The iPad Air got off to a fast start -- but demand has been cooling off. (Photo: Apple.)

As of Dec. 28 -- the last day of Apple's fiscal Q1 -- the iPad Air and iPad Mini Retina combined to account for 8.6% of all iPad usage, according to Fiksu. By the last day of Q2, usage for the new iPads had grown to 14.1% of the total, a 5.5 percentage point increase.

Considering that Apple benefited from "channel fill" in Q1 -- selling the new iPads to build up inventory at third-party retailers -- iPad unit sales could easily have fallen 40% sequentially this quarter. That would entail a significant step backward from Apple's 19.5 million iPad sales in Q2 last year, when Apple was meeting pent-up demand for the original iPad Mini.

The iPad Mini Retina is a flop
If I had to boil down Apple's iPad problems to a single issue, it's that the new iPad Mini Retina is a flop. After five months on the market, the iPad Mini Retina accounts for just 3.7% of all iPad usage (as of Thursday). By contrast, the third-generation iPad (the first to offer a Retina display) still accounts for 13.6% of iPad usage, even though it was on the market for less than eight months in 2012.

iPad Mini Retina sales have fallen way short of expectations. (Photo: Apple.)

To some extent, weak sales of the iPad Mini Retina could be the result of a crowded iPad market. For just $100 more, tablet buyers can get a whole lot of extra screen real estate with the iPad Air. Alternatively, the original iPad Mini is $100 cheaper and offers "good enough" specs for many users.

However, there's also a quality issue. To be sure, the iPad Mini Retina has gotten good reviews from some respected publications. That said, many reviewers have found that Amazon's Kindle Fire HDX offers a much higher-quality display than the iPad Mini Retina.

Reviewers have raved about the displays on Amazon's Kindle Fire HDX tablets. (Photo: Amazon.com.)

This is a big problem for Apple, which spent most of 2012 training consumers to demand high-quality Retina displays for their mobile devices. Not only is Amazon offering lower price points -- the Kindle Fire HDX starts at $229 for the 7-inch version and $379 for the 8.9-inch version -- but it's also offering better quality on at least one critical feature.

Will Apple reclaim the lead?
In some respects, Apple's commanding lead in the tablet market remains intact. There are far more iPad-optimized apps than tablet-optimized Android apps. Even though Apple's technical lead has shrunk (or disappeared, perhaps), it still offers a superior overall user experience. That's a major reason iPad usage still dwarfs usage of all other tablets combined.

The iPad can still be a meaningful contributor to Apple's profitability even if sales growth remains small. As long as engagement remains high and the installed base of iPads increases, Apple can take a page out of Amazon.com's playbook by making money while people use their iPads: by selling apps, books, movies, and so on.

Indeed, strong iPad usage is undoubtedly one of the factors driving big gains in Apple's revenue from iTunes and the App Store. This revenue stream will become increasingly important to Apple's earnings in the next few years. However, what Apple shareholders really want to see is a return to solid sales growth for the iPad -- even if it continues losing market share.

Apple needs to double down on display quality if it wants to reignite iPad sales growth.

To reignite iPad sales growth, Apple may need to become somewhat more aggressive on pricing for the iPad Mini Retina. More importantly, it needs to make the display at least as good as what Amazon and other competitors are offering (and preferably better). Adding a faster processor and a fingerprint sensor may help sales a bit, but improving the display is the X-factor.

Foolish final thoughts
While I remain bullish about Apple's long-term prospects, the iPad no longer appears to be a major part of the Apple growth story -- aside from its role in driving content and app sales. iPad sales have stagnated in the last year, and the introduction of two new iPads last fall provided only a modest short-term sales bump.

To reverse this discouraging trend, Apple needs to double down on its pursuit of perfection for the next iPad Mini. If Apple can deliver an updated iPad Mini Retina with a best-in-class display this fall, it could rejuvenate iPad sales, especially if Apple can lower the price. Otherwise, investors may need to look to other product lines for long-term growth.

Is this Apple's next growth market?
If you thought the iPod, the iPhone, and the iPad were amazing, just wait until you see this. One hundred of Apple's top engineers are busy building one in a secret lab. And an ABI Research report predicts 485 million of them could be sold over the next decade. But you can invest in it right now, for just a fraction of the price of Apple stock. Click here to get the full story in this eye-opening new report!


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Comments from our Foolish Readers

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  • Report this Comment On April 12, 2014, at 2:01 PM, RattyUS wrote:

    So after yesterday's news that Samsung used false figures from Strategy Analytics to knock Apple's marketshare down a year or so ago, we now get this hit piece.

    I tend to think that iPad usage is high because people are using them and not some mythical Android box that is sitting in a warehouse.

  • Report this Comment On April 12, 2014, at 2:10 PM, Dbolander wrote:

    This website name is about the only thing correct you'll read here.

    Adam Levine-Weinberg once again trumps the old horn of marketshare while doing zero leg work to see what that actually means.

    Adam fails to mention that in court this week Samsung's own documents showed that they didn't sell nearly the number of tablets first touted.

    Adam fails to mention web usage and how mysteriously almost none of these Android tablets register with this more accurate measure.

    Adam fails to mention how most manufacturers tout "shipped" units not "sold" units like Apple.

    Adam, how about you go back to the drawing board on how you can spin this. Or shall we just reference this article at every quarterly earning of Apple's to point out hack reporting?

  • Report this Comment On April 12, 2014, at 2:38 PM, slapppy wrote:

    Hahaha...nice. I guess this is to try and deflect the truth that Samsung and media providing false figures to make the iPad sales look bad. So now its "fools" turn to take the lead.

  • Report this Comment On April 12, 2014, at 2:42 PM, thoughtsimple wrote:

    It is quite clear that the iPad replacement cycle more resembles the laptop cycle than the phone. This means that growth is inevitably going to slow. I tend to doubt the market share numbers given the revelations this week from the Apple Samsung trial.

    Where is the analysis of Amazon and Samsung usage numbers. You did an admirable job explaining your growth numbers using the usage data for Apple but somehow missed doing the same for your Android marketshare analysis. Funny thing.

  • Report this Comment On April 12, 2014, at 3:31 PM, rocket625 wrote:

    everytime i turn around fool starts in how apple is "finished" and yet apple makes more money than anybody. how long before the fool actually admits appl is pretty cool? Never? While I remain bullish about Apple's long-term prospects, the iPad no longer appears to be a major part of the Apple growth story - the ipad is by far the best device going but NO the fool has to bash it. this stock should be at 1000$ but with a population of bashers that will not relent its headed nowhere.

  • Report this Comment On April 12, 2014, at 4:13 PM, macktv wrote:

    The Motley Fool is almost like reading the National Enquirer, except the Enquirer can be more accurate.:)

  • Report this Comment On April 12, 2014, at 4:26 PM, TMFGemHunter wrote:

    @rocket625: "Bashers" can't keep a good company's stock down for long. Ultimately, the fundamentals determine where the stock goes: not what anybody says.

    In any case, I would point out that I own a significant amount of Apple stock, The Motley Fool owns Apple stock in some of its funds, and some of The Motley Fool's newsletters recommend Apple stock -- all of this was in the disclosure statement above. You can call me a "basher" if you want. I would just call myself realistic.

    To the other commenters: Yes, iPad usage far outweighs usage of other tablets. I said that in the article. But how much money does Apple make when iPad users access the web? Zero. The fact that other tablet makers have low margins or people don't use their tablets or a lot of Android tablets are in retail inventories is irrelevant.

    What is relevant is how many iPads Apple is selling and how high its margins are. We know from Apple's quarterly reports that iPad sales growth is slowing on a unit basis and is barely positive when looking at revenue rather than the number of iPads. Based on Apple's financial results, it's pretty clear that iPad-related profit declined significantly last year, and it could very well decline again this year.

    From an investor perspective, you don't get a gold star for being the best if your earnings are still declining. It's becoming increasingly clear that the market for $500+ tablets is a fraction the size of the market for $500+ smartphones.

    Adam

  • Report this Comment On April 12, 2014, at 5:31 PM, JeffMaxinDC wrote:

    Adam...You definitely have some valid points. iPad growth has steadily slowed and it's certainly not the growth product that it once was. As you point out, that's because the replacement cycle is slower and Apple is bumping up against saturation in the high end tablet market.

    The problem I have with the article was its click bait title and the continued emphasis on market share. A year or two ago the market share mantra made sense. Research firms and market analysts were indicating that Apple was in a market share free fall as cheaper devices came on the scene and that's historically a bad thing.

    However, low market share in and of itself has never been the problem - it's all of the other things it brings with it. Things such as declining profits, loss of developer support and a weakened ecosystem. But two years into Apple market share "crash" and none of those things has come to pass. Profits are still high, iOS is still the first mobile platform developers go to and the ecosystem is stronger than it ever was. There's not a lot of evidence that buyers of cheaper devices would have bought an iPad instead. Plus usage figures for iOS are still sky high. The other shoe never dropped. Which leads me and others to question whether there's any validity to the market share argument at all.

    Couple that with the revelations that have come out this week at the Samsung trial that Samsung seems to have intentionally mislead and overstated their tablet sales and that the research firms were WILDLY far off in the analysis, and I'm left questioning if the market share projections themselves have ever been valid.

    Apple's own sales numbers demonstrate that iPad sales are slowing. You didn't even need to wade into the whole market share morass. But if you're going to wade into it, then you've got explain why it matters (since that's not self evident anymore) and then at least ADDRESS the news that came out this week from the trial. Ignoring those things just makes you look biased.

    In short, you ruined a good and valid observation with anti-Apple talking point soup. I don't know about you, but I'm tired of soup. I'd rather digest something more solid.

  • Report this Comment On April 12, 2014, at 5:37 PM, Melci wrote:

    I'm sorry Adam but you lose all credibility when on the one hand you criticize Apple for the iPad's enormous margins being slightly lower when on the other hand the Android tablets that you proclaim to be so successful are sold with razor thin margins or at a loss in order to have any hope of competing. And you then have the gall to advise Apple to drop the price of the iPad mini further to goose sales. Make up your mind and decide what you want - profit or marketshare?

    Do you see the double standards you are displaying here?

    Next, how can we take you seriously when you give so little weight to the enormous disparity in actual usage (84% browser share, 500% greater e-commerce revenue for the iPad). This screams out both how inaccurately inflated Android sales figures are with these millions of mysterious white box Android tablets pulled out of a hat in the last 12 months, and how useless Android junk tablets actually are in day to day usage.

    And finally, how can you miss Apple's utter dominance of the Business and Education markets of 92%, and 94% respectively according to Good Technology, Egnyte and IDC and the implications this has going forward?

    No, I'm afraid it's quite understandable why other commenters are ripping your article to shreds Adam - you've been suckered by the Church of Marketshare.

  • Report this Comment On April 12, 2014, at 5:41 PM, Melci wrote:

    By the way, great comment JeffMaximDC. Very insightful.

  • Report this Comment On April 12, 2014, at 6:23 PM, TMFGemHunter wrote:

    Thanks for the comments everybody.

    @JeffMaxinDC: I think Apple bulls have become very touchy about the market share issue. I mentioned market share a grand total of two times in this article. The first time was in the introduction: it was just an observation that tablet sales are growing rapidly, but iPad revenue growth is down to the single digits. The second time was later on in the context of saying that Apple shareholders want to see the iPad return to solid growth, even if it continues to lose market share. I.e. Absolute sales numbers are the problem, not market share.

    I'm sorry if it seemed like this article was all about how terrible it is that the iPad is losing market share. But having re-read the article again, I don't think I said that. It's just that "market share" pops off the page to a lot of Apple bulls. As a matter of fact, I agree with you that market share doesn't matter.

    I apologize for the title, but in all likelihood, if the title was "iPad is Still the Best Tablet But Its Sales Growth is Slowing and Margins are Probably Falling", you probably wouldn't have read it. If my name was Warren Buffett, I could use whatever title I wanted. I hope readers can judge the piece based on its merits and not just the title.

    @Melci: Check out this article: http://www.fool.com/investing/general/2013/07/08/budget-tabl.... I think I have been consistent here in arguing that market share does not matter. I think budget tablet makers like Amazon, Barnes & Noble, HP, and Google will be lucky to make a few dollars selling tablets.

    So I don't think those companies are so great. But if they are willing to sell tablets at breakeven, and those tablets are halfway decent, it's not good news for Apple. The indisputable fact is that iPad revenue growth has slowed to a crawl. And I can't imagine a credible argument that Apple grew its iPad-related earnings last year selling 22% more iPads but only taking in 3% more revenue. Competitors are unsuccessful, but their particular tactics are also ensuring that the iPad is becoming less successful.

    I want Apple to pursue profit, not market share. But Apple is losing on both counts now. A price cut for the iPad Mini Retina (not the iPad Air) might make sense depending on how much a typical user would spend on apps. (You could give up more profit up front if you're getting a long-term revenue stream.) That's not data I'm privy to, though.

    Adam

  • Report this Comment On April 12, 2014, at 6:33 PM, thoughtsimple wrote:

    >What is relevant is how many iPads Apple is selling and how high its margins are.

    Then why the market share angst? Why should Apple reduce margins to boost market share if the only thing that is relevant is Apple's volume and margins?

    You state that Apple's rivals are gaining momentum in your article but in your comments you imply that share isn't relevant. Which is it?

    Also, there is little point to higher than retina resolution but significant downsides to battery life. If the retina Mini isn't selling, what is the point of marginally better specs? Apple doesn't engage in spec wars that are pointless.

  • Report this Comment On April 12, 2014, at 6:39 PM, mrjes wrote:

    I'm still using my 3rd generation iPad and in fact it's become my go to device for the most part over the years that I've had it. With the proper app selections there just isn't a great deal that it can't do and I still find it to be an absolute wonder. My next BDay I'll be 63 however and my vision is in notable decline so I'm hoping and praying that the rumored iPad Pro does in fact hit the shelves sometime this year. I've seen the other large screen tablets and I've found them all to be wanting and not just in terms of them not having access to the app store ecosystem. Call me an Apple fanboi if you want to, but IMHO no other tablet compares favorably to even my older version of the product. I got a fantastic deal on a 7" Dell Venue Pro and since I needed to have a windows based unit to download some photoediting suites that I'll be using on a larger monitor it will serve that purpose. The audio IS better than at least my 3rd generation iPad, but I've otherwise found it to be clunky and unintuitive despite the fact that it's running Windows 8.1. It seems as if I find myself having to take 3 or 4 steps to accomplish what I can do with 1 on my Apple tablet. It's as if the people who designed the software and engineered the unit stopped when someone said "This is good enough" rather than putting in a bit of extra effort to make it a truly outstanding product. As for your truly, I've definitely seen the light as far as the tablet wars are concerned.

  • Report this Comment On April 12, 2014, at 7:03 PM, notrozer1 wrote:

    what about windows tablets like the dell venue 8, Full laptop type capibility to run x86 software and tablet function too..

    surface Pro, Real computer

    My company look at ipads and passed,but were adopting the dell venue 8, its only $200 vs the 300-400 for ipad mini and we have more controll over it...

    usb drives, memory cards, serial cables etc..

    nice try apple

  • Report this Comment On April 12, 2014, at 8:01 PM, TMFGemHunter wrote:

    @thoughtsimple: Thanks for the follow-up comment.

    I don't have any "market share" angst at all. I don't think there's any way Apple can avoid losing market share over time in phones and tablets because the world will be deluged with super-cheap devices, mostly running Android. But it doesn't matter if Apple can keep growing its own revenue at a decent clip. That's what is happening in the smartphone market.

    The tablet market is a different story. If Android tablet revenue was growing 80% and iPad revenue was growing 20%, Apple would still be losing market share but I wouldn't be writing this piece.

    The problem is that iPad sales growth has basically come to a halt. I think the existence of pretty good Android tablets at lower prices has a lot to do with that. That's the only sense in which other tablet makers' momentum is relevant. My hypothesis about why iPad sales growth has cratered could be wrong -- maybe the high-end tablet market fully matured in 3 years and it has nothing to do with competition. In any case, the fact that iPad revenue growth went from high double digits to low single digits in a single year is just that: a fact.

    It will be interesting to see what kind of iPad sales numbers Apple reports this month. Based on the Fiksu usage data I track, I expect iPad revenue to be down year-over-year in Q2. If that trend holds, iPad revenue could end up declining for the full fiscal year, too. I'm going to wait for the numbers on 4/23 -- maybe Apple can pull a rabbit out of the hat.

    I hope this clarifies my thoughts on absolute sales vs. market share.

    Best,

    Adam

  • Report this Comment On April 12, 2014, at 9:07 PM, zippero wrote:

    In its first year, the cheaper iPad Mini cannibalized the full-sized iPad, which explains the meager 3% iPad revenue increase despite the 22% increase in unit volume. But now the iPad Air is cannibalizing the iPad Mini as consumers can get the full-sized screen they want that is also super lightweight. With the iPad Air's higher ASP, iPad revenue growth will again exceed iPad unit volume growth.

  • Report this Comment On April 12, 2014, at 9:27 PM, TMFGemHunter wrote:

    @zippero: That's true to some extent. In the December quarter Apple sold a ton of iPad Airs. But it also sold a ton of iPad Minis. The ASP continued to decline, which is why unit sales rose 14% but revenue rose only 7%.

    There's a good chance that ASPs will rise in the just-ended March quarter, because Apple sold mostly iPad Minis in the year-ago quarter. However, I believe that the decline in unit volume will more than offset any increase in ASP, and revenue will be down year-over-year.

    Longer-term, I think flat ASPs is the best outcome possible with the current form factors. If Apple does launch a larger iPad Pro, that could raise the ASP if it sold in decent numbers. I think an iPad Pro starting price would be at least $700-$800.

    Adam

  • Report this Comment On April 12, 2014, at 9:34 PM, Synthmeister wrote:

    You're only using online usage stats to prove that the iPad is "in BIG Trouble."

    Give me a break.

    You should have at least waited 11 days for Apple's official quarterly report before spouting this stuff. Then you can offer us some real units sales numbers. Amazon, Samsung and everyone don't give ANY sales numbers, BTW.

  • Report this Comment On April 12, 2014, at 11:13 PM, zippero wrote:

    The rate of decline in ASP is bottoming out as iPad Air regains the torch from the iPad Mini. This was inevitable as Apple would eventually make the full-sized iPad practically as light as the iPad Mini itself. It's doubtful the Mini will ever displace the Air again as I believe most people want a bigger screen for their tablets. In the long-term, it is better for Apple for the Air to do better than the Mini because of the higher profitability. You believe that iPad Air sales have hit a wall, but you don't actually include any evidence of this in your article, which is odd. The fact that the iPad's ASP's rate of decline has slowed significantly and seems to be recovering is solid evidence in itself that consumers in general are gravitating back to the top-end iPad Air over both the iPad Mini and cheap Android tablets. If people are choosing the Air over the Mini, then people are also choosing the Air over Android tablets like the Kindle and Nexus. Keep in mind also that budget tablets and smartphones attract mostly budget users who really only bought their device because it was cheap and so it follows that these people also lack the money to spend much money on apps, click on ads, or engage in much e-commerce in general. So Android players are almost universally profitless. The top 20% of consumers around the world will always spend the most on mobile hardware, apps, ads, e-commerce, etc. Like the poor Android users, the rich iOS users will always be with us. Though some of these consumers may go buy a zero-margin Nexus 7 or Kindle, that's the small minority for this group with most of the disposable income. In the long term, profits matter to fund R&D and drive innovation to stay on the cutting edge of hardware to satisfy this group even further. When Google sold Motorola to Lenovo, Larry Page said Google wasn't really prepared to go "all-in" and invest what was necessary to make Motorola successful. In contrast, Apple is willing and has the profits to stay ahead not only in tablets but in smartphones, PC's, and wearables as well. The rest of the market gets commoditized because of its focus on price because there's no way to differentiate one Android phone or tablet from another. When the Android OS is all the same from device to device, price is the only differentiator, as it was for the Windows PC makers. If there's any decline in iPad unit volume, it will be because everyone who wants an iPad already has one. It won't be because these top 20% consumers have suddenly decided they need to go on tight budgets. Just as Apple takes 80-85% of all smartphone industry profits now according to Raymond James and Canaccord Genuity (up from 56% last year), I think you'd find that Apple probably gets 95% or so of all tablet profits, given everyone else competes on price.

  • Report this Comment On April 12, 2014, at 11:22 PM, bsmountain wrote:

    about the only thing worse than reading this article was making the mistake of clicking on the link to get the 'full story' .......

  • Report this Comment On April 12, 2014, at 11:35 PM, Dbolander wrote:

    The other thing not mentioned since we’re focusing on revenue is app purchases, for which Apple takes a 30% cut. Apple’s downloads business represents nearly a third of their revenue.

  • Report this Comment On April 12, 2014, at 11:58 PM, LeadGoat wrote:

    Reading this on an iPad 1 and still getting ten hours of battery life.

  • Report this Comment On April 13, 2014, at 12:40 AM, iphonerulez wrote:

    It seems as though Apple has been in big trouble for years now which is rather strange because the company still has the largest market cap by a decent amount and more overseas reserve cash than a fair number of tech companies combined. I hear a lot of people claiming how Apple's iPad business is in trouble but when I think of the countless number of schools in the U.S. who will eventually be dumping all their books in favor of tablets (probably more than a few iPads will be purchased) and businesses who may dump their laptops in favor of tablets I don't quite think the entire tablet market is tapped out yet. What is it about Apple that continually draws negativity about it's future growth. Aren't all businesses prone to possibly running out of customers to sell things to. After all this is a finite world with a limited number of humans on the planet.

    Yes, I agree that the iPad business could be slowing down from the initial huge growth percentages but that hardly means that the iPad business is in BIG trouble. Are all maturing companies in BIG trouble simply because their growth slows? I think only by Wall Street's perverse standards. No company has huge growth indefinitely.

  • Report this Comment On April 13, 2014, at 1:05 AM, Foolorama wrote:

    This is really dopey. PLEASE pay attention to what is real and stop believing everything you read about Apple. If in two years, Apple has not released another breakthrough product, then you have position to say something.

    NOTHING can be determined by the marketshare argument, given that the vast majority of "Android Tablets" are actually dumb terminals, and particularly now that internal documents from Samsung demonstrate that there is no long term commitment to the Andriod system from them. And ESPECIALLY when we just were given a security demonstration with the Heartbleed bug. Clearly "marketshare" is not everything...

  • Report this Comment On April 13, 2014, at 2:31 AM, Stelios22 wrote:

    The iPad mini retina is an unnecessary expense. I had an iPad mini, sold it. Problem was not the display, but the size--either not big enough (for example, the nice logitech keyboard that fits it like a glove is a bit too small for comfort) or too big (doesn't fit in any pocket). For the price, it just doesn't have the value. Consumers are not as stupid as Marketing thinks.

  • Report this Comment On April 13, 2014, at 6:30 AM, chhabramohit wrote:

    I think it's because of saturation and because of the incredible software support Apple provides to older models. Even to this date in 2014, a 2011 iPad 2 fully supports iOS 7.1. This is something unique to Apple but unfortunately reduces demand for newer products. It's definitely good for customers but a little bad for business.

    I have an iPad 3. With the Retina Display and the latest software being supported, I have no plan of buying a new one and this is probably what most customers would think.

  • Report this Comment On April 13, 2014, at 9:30 AM, Tommyzinho wrote:

    I consider myself a typical consumer, and somewhat of a gadget hound. I've owned more than one Android tablet, a Nook (Android), a Windows 8 tablet, along with several iPads. Every single time I think I want to move away from the iPad to another platform, I eventually come running back to the iPad. It all comes down to user experience, and Apple has the developer advantage by 100 miles. Their tablet optimized apps absolutely demolish the competition. I've always been optimistic whenever I strayed, thinking this would finally be the time I left the iPad for good, but it never works out that way. Even the Windows 8 tablet-which offered MS Office productivity-wasn't nearly enough to keep me. The apps just weren't there, and neither was overall hardware quality. Apple just gets it right with the iPad. It's a solidly built piece of high quality hardware that just works. BTW...the 4x3 aspect ratio is much better than the 16x9 or 16x10 everyone else is using. Holding it in portrait mode feels 'normal', and reading in landscape is much more comfortable. I wonder when the competition is going to realize that most people read in landscape, and the ratio they're using makes the screen feel too 'squished'? Another example of how Apple just gets it. Keep your useless market share. Those $20 Azpen tablets are no threat to anyone. Apple is sitting on about $160billion in cash because they understand what keeps consumers happy.

  • Report this Comment On April 13, 2014, at 10:42 AM, Skalilec3 wrote:

    I am just totally confused. Was there a purpose to this article? So, we all hold hands and jump off a cliff? I mean have you ever actually worked for a living within a corporation? You think there should be no competition, or price pressures or slowing in volumes? I know you fools think you know everything but, here is an idea....we buy companies because of how they react to the reality of the market place. How they compete.

    Really this is just beyond my understanding how you are allowed to voice anything relating to business.

    Maybe you should contact some of the schills on CNBC. I hear Doug Kass got rid of all his Apple apparently, sadly , he is still waiting for that schmatta Phone to compete with those cheap knock offs. Oh, yes that is what I want to do , wake up every morning with maybe the finest products in the world and say to myself, you know what let's go head on with those cheap knock offs from the China.

  • Report this Comment On April 13, 2014, at 11:21 AM, lrd555 wrote:

    Q: How many tablets has Samsung & Amazon sold?

    Ans: No one knows.

    Another useless, baseless article.

  • Report this Comment On April 13, 2014, at 11:59 AM, TMFGemHunter wrote:

    Thanks for the comments, everyone.

    It seems like everybody is dancing around the fact that Amazon has a higher-quality display on the HDX tablets compared to the iPad Mini Retina. The argument I made here is not about market share. It doesn't matter if other vendors are selling 10 million or 100 million cheap $99 or $149 Android tablets.

    But Apple is not going to be earn a premium if its products do not maintain a consistent edge over the competition in terms of quality. The iPad Mini Retina was not up to the standard of the iPad Air or competing tablets like the Kindle Fire HDX. As a result, it looks like Apple has only sold around 6 million in the last 5 months.

    Adam

  • Report this Comment On April 13, 2014, at 2:04 PM, bobbydig wrote:

    Like David Oritz and his cheesy pic of him and the president, Adams was paid to write this article because Google tablet market is going NOWHERE. I traveled coast to coast this week. 99% of the people used iPads. I did see a couple Kindles, not one Samsung tablet. Every pilot I saw, had an iPad. Go to a Verizon, AT&T or even Best Buy, they use iPads. All the school districts in the area are using iPads. Restaurant are using iPads to view menu or take orders. I watch the News on TV, ALL iPads. At the Coachella Music festival, iPads on every stage. At NAB in Vegas, iPads ruled the biggest media show on the planet. I bought a new house and the entire sales was done on an iPad. Mayflower's who moved by furnishing, used an iPad to estimate my order. I had the estimate before he left. The iPad rules every market. No one else comes close.

    Hey Adam, where is your Selfie?

  • Report this Comment On April 13, 2014, at 2:32 PM, Dbolander wrote:

    While the HDX has a wider color gamut than the mini 2, it's also nearly an inch smaller in screen size with a lower resolution and no 64-bit processor and comes with a plastic body. How is that outpacing Apple?

  • Report this Comment On April 13, 2014, at 2:39 PM, JohnYoung wrote:

    I bought the iPad 2 when originally released and the incremental improvements up to the current model (iPad Air) haven't justified the high cost of replacing a product that is just now 3 years old. I wasn't really sure how I would use the iPad when it first arrived, but it has replaced my need for a laptop computer, when combined with Belkin's keyboard cover, and I use it beside my desktop Mac as a TV. So for that reason, I'm waiting for a model that has more of a 16:9 aspect ratio.

  • Report this Comment On April 13, 2014, at 4:11 PM, zippero wrote:

    Samsung's Galaxy phones have higher resolution, larger screens than do iPhones, but Galaxy S4 sales were lower than S3 sales and S5 sales are likely to be lower than S4 sales. A good screen on a Kindle won't save it either.

  • Report this Comment On April 13, 2014, at 7:09 PM, Alaska99801 wrote:

    Adam, Adam, Adam...you are a fool! I mean you do write for Motley Fool. I cant wait till my subscription is up this year so I don't ever have to read or be followed by the stupid, not foolish writers that the site has.

    I will take just two areas where your assumptions, that is all they are, are wrong. And I dare you into writing a piece about Apple, you and I, and I bet that my assumptions come closer to the truth within the next year. How about it? Of course you will not take my bait. You are not fool enough ah?

    Lets take quality. You wrote that Apple has the quality issue, really? Do you have an editor? How do you reconcile your words with everyone else's take on the quality of Apple products? You my dear fool, confuse quality, with hardware and specs. Not the same thing my foolish friend. Apple does not have a quality problem, as you well know, the display of the Mini is just not as high specked as the Fire. Thats all. It has nothing to do with the quality of the display, it is all about hardware. And you also well know how often Apple goes chasing after specs, like you writers do? Zero, nada, zilch!

    I have a mini. My eyes, your eyes, cannot discern anymore these new high resolutions we have. But for you guys, it is all about the god, the specs. Unlike 99% of consumers that don't care a second about them. They care about the "quality" of their experience. Do you understand it Adam, my foolish dreamer?

    And last, the mantra of all you writers and analysts, market share. We know the information that has come out of the trial regarding Samsung (the number 1 seller of android tablets), so I don't have to explain that to you. Even though it appears that the information doesn't make any difference to you. It is so, basically because you don't assimilate information like the rest of us, or you are just daft. Which one is it Adam?

    We know, and I hope that you understand, that shipping, in the channel, maybe, in a warehouse somewhere, does not a sale makes. That web use is a better gage of of ownership numbers. It is difficult for someone as block-headed as you to get the feel for that, but it is all there for you to see if you wanted to.

    I make you another bet. The retina iPad mini has sold better than any one of the dozen numbers of Samsung tablets in the market today...I call the Samsung strategy, the Korean Noodle Strategy (KNS). Throw on the wall and see what sticks. Plastic and all!

    By the way, its your sub-headline, the iPad mini is a flop, the same kind of flop that all you writers and analysts have announced the iphone 5C to be? I know how much HTC, Amazon, Google, Motorola, Samsung, want to have a flop like that !

  • Report this Comment On April 14, 2014, at 9:30 AM, TMFGemHunter wrote:

    @Alaska: Re: your last comment, I guess you didn't read this article of mine from last year. http://www.fool.com/investing/general/2013/10/21/the-iphone-.... Please don't put words in my mouth.

    Your bets are empty words. Not only does Samsung not release sales statistics for individual models, neither does Apple. I can tell you this much -- it is virtually certain from the usage data I follow that the original iPad Mini has outsold the Retina iPad Mini since the latter went on sale: by as much as 2 to 1. When is it a good thing that consumers would rather have last year's product to save $100?

    I'm afraid I don't follow your quality vs. spec argument. People are not just abstractly comparing numbers between the Kindle Fire HDX and the iPad Mini Retina. Pretty much every side by side review I've read says that colors are noticeably better on the Kindle Fire HDX. Is the overall tablet experience better? I don't think so. But I don't think Apple wants to be using inferior components and falling back on the quality of the "experience" to sell products at a premium.

    I have a BlackBerry PlayBook tablet and my mother has an iPad 2. I would guess that she uses the iPad a couple of hours a day. I use my PlayBook less than a couple of hours per month. She's probably racking up 50-100 times more web usage than me. It's still one tablet sale. Yes, iPad usage is way higher than usage of other tablets. Yes, iPad-related profit is way higher than other tablet vendors' earnings. But don't believe for a moment that iPad is still outselling non-iPad tablets in raw numbers.

    (In case you're wondering why I don't have an iPad, I got my PlayBook for $199 -- the cheapest iPad at the time was $499, far more than I could afford then. The PlayBook has been perfectly functional for my very limited tablet needs.)

    Adam

  • Report this Comment On April 14, 2014, at 11:18 AM, robertbickel wrote:

    WHY I DID NOT GO APPLE

    This might be interesting to apple marketing group.

    Most of my friends have an apple product. I purchased an apple ipod gen 5 and found the screen to be annoyingly small for my fingers and using SIRI for voice to text always requires keyboard interactions. So, I kept putting off purchasing a phone, desktop and tablet in hopes that the announced launch of the 5c and 5s would have a larger screen. It did not and I am told the 6 will not be available until the end of 2014. I planned on going with apple platform-phone-pad-desktop and maybe laptop. however, my dell laptop is on its last leg and Verizon is offering unlimited text data and 1 gig of data for $60.00 a month for 2 yrs. So last friday I made the jump to the S-5 and plan to purchase the Samsung AIO desktop computer. I have nothing against Apple products but it just did not fit my requirements. Since I am a novice at technology I found it wiser to stay with and learn 1 platform. Maybe, i'll look at apple in a couple of years.

    Robbie

  • Report this Comment On April 14, 2014, at 5:20 PM, jvgfool wrote:

    For functionality, the Surface Pro is a very good way to go. By not including those numbers, you left a hole in your story.

  • Report this Comment On April 14, 2014, at 5:26 PM, plantoretire1day wrote:

    Sensational and irresponsible headlines seems to be what fool.com specializes in. Yes, it gets my attention, but I signed up because I thought you were a trustworthy, unbiased company who was looking out for investors in an honest, forthcoming way. Your exaggerated headlines impact the very investments you have told us to buy. It's unnecessary and it seems that the once trusted fools.com organization has its own money making strategy through market manipulation and generating investor fear instead of solid business practices.

  • Report this Comment On April 14, 2014, at 5:45 PM, tadtanderson wrote:

    I have not read so much nonsense in one place for a very long time.

    I hope no one believes this crap.

    I will give you credit for sucking me in with the title, but nothing in this article/blog/whatever is even close to true.

  • Report this Comment On April 14, 2014, at 7:30 PM, tfmeehan wrote:

    Samsung only reports units shipped, not sold, and generally lies about that. Amazon does not report sales or profit.

    I like the Kindle but it is probably a loss leader intended to sell books and Prime.

    I doubt anyone but Apple is making much money on tablets of any kind but the "Fool" is joining the marketshare bandwagon which is a fool's game after all.

    Apple is crying all the way to the bank and will for a very long time.

    What IS eroding is any respect I ever had for the Motley Fool.

  • Report this Comment On April 14, 2014, at 7:46 PM, iICU2 wrote:

    There are only so many "WANTTOBEES" in the world and soon or later they run out of money purchasing things that they think give them status...If I had some water front property in the Everglades, I would look for people that own Apple products.......

  • Report this Comment On April 14, 2014, at 8:10 PM, jarold4 wrote:

    Why not add Blue tooth to the Ipad mini.

  • Report this Comment On April 14, 2014, at 8:18 PM, notme2012 wrote:

    Apple's two main products are in markets that have definitely matured and close to saturation. The smart phone market has already peaked and probably no company will have sales like they had in 2012. Now Apple wants the cell phone companies to pay $100 more for the next model i-phone. Apple fans would clearly pay a $100 more for the next model i-phone. But the rest of the smartphone buyers, probably won't pay $299 for the next i-phone.

    The tablet market isn't as saturated, but the high end is saturated. Which is Apple's segment. As far as businesses buying i-pads, most of the businesses were buying i-pad2s, which isn't being made anymore. So that means businesses have to buy more expensive models. Not good for sales, to a possibly saturated marketplace.

    Apple needs a new and totally different product. Apple needs something new for the Apple fans to buy. With something new, Apple will gain marketshare. Because Apple has already done this with the i-pod to the i-phone to the i-pad. Apple needs another product to get that incremental growth.

  • Report this Comment On April 14, 2014, at 8:51 PM, GlobeTrttr wrote:

    The sales figures are the tail wagging the dog. The issue is Apple moved from transformative innovation to core/adjancent (making the iPad smaller) innovation and that is poaching sales for the most part from the larger iPad offerings. Simple as that. Most companies entering maturity phase find that in core innovation adding incremental sku's adds complexity throughout the value chain without significantly improving revenues, profits or market share. The key will be whether Apple can continue to invent original innovations that everyone must have - the iPhone and iPod hit that mark in their era - adding more of the same in any of their product lines will not significantly add to the value of the company

  • Report this Comment On April 14, 2014, at 11:47 PM, Rudyescher wrote:

    Dude, It is called a mature market. It is oversold. My Family is three persons. Parents and a 12 year old. We don't throw our money away on electronics that get obsoleted quickly. We have an Ipad 2, waited for that version, a kindle, an HP gaming capable desk top, and an HP excellent sound system, laptop. We have DVD players, and three Plasma TVs. Two surround sound sound stereo systems. and portable speakers for our tablets and smart phones.

    I am not going to spend any more money on electronics until I buy a couple more cars.

    Invest in Ford or Volkswagen. They both come with satellite radio and blue tooth, awesome.

    Mature markets grow at 5 to 15% per year, that is where all the new technology is headed.

    Hello the bubble has already burst, you would think that you guys would know that.

    Is that why my Motley fool mutual funds are now under-performing?

  • Report this Comment On April 15, 2014, at 12:04 PM, H2323 wrote:

    It's just that the market is getting saturated with choice, just like cars. Fact is Apple makes the nicest most powerful tablet with best app selection. The same does not go for their phones though, they make one of the nicest phones now and app selection is on equal footing with Google. So you have a company not growing like it did because competitors have access to the same tech. They need a new product for them to grow like they did, it's not hard to figure that out. Maybe they pull it off, maybe they don't.

  • Report this Comment On April 15, 2014, at 12:40 PM, observerbob2013 wrote:

    Apple has simply matured, unless it finds another blockbuster product the law of large numbers mean that the downside is much more likely than the upside.

    The first rule of investing is Never, Never fall in love with a stock, always keep your eyes and mind open.

  • Report this Comment On April 15, 2014, at 12:55 PM, Mathman6577 wrote:

    Apple does not care abourt marketshare. It cares about providing a great product and making money. Google, Samsung, Microsoft are not making money.

  • Report this Comment On April 15, 2014, at 1:24 PM, cryptokev wrote:

    Apple is in big trouble however I just purchased two iPads for my business and family... you're welcome Steve Jobs. (yes I know he died)

  • Report this Comment On April 15, 2014, at 4:29 PM, aylk wrote:

    Hahaha!!! You bought a Playbook!!!

  • Report this Comment On April 16, 2014, at 10:47 AM, BlueBoomPony wrote:

    14% year over year growth = crashing halt

    That's all I needed to read to know this article is just a steaming pile of yellow journalism click bait. Congrats, Adam, you've once again added nothing of value to the human experience.

    I love the note to be respectful with comments. I will when your writers stop insulting our intelligence. Two way street there, fools.

  • Report this Comment On April 16, 2014, at 10:52 AM, BlueBoomPony wrote:

    Also, maybe get a commenting system from this century? We can't even edit or reply to others? Very innovative, MF.

    Another idiot writer last week admitted the low end phone market was a money loser, but Apple was ignoring it at its peril. What was once a punchline in a comic routine ("They lose money on each one, but they'll make it up in volume!") is now put forth as financial wisdom.

  • Report this Comment On April 16, 2014, at 1:29 PM, TMFGemHunter wrote:

    @BlueBoomPony: Sorry about the commenting system -- I know it needs work.

    I'm sorry that you don't like the article, but you are cherry-picking facts. Last quarter, it's true that Apple posted 14% unit growth for iPad. But unit growth is meaningless out of context. Revenue growth was only 7%. Last year, iPad revenue growth was only 3%. I would consider that a crashing halt compared to high double-digit growth in 2012.

    Furthermore, I expect Apple to post a double-digit year-over-year decline in iPad sales when it reports earnings next week. Maybe if it does, some of the people who've been bashing me all week will come back and apologize. But I'm not holding my breath...

    Adam

  • Report this Comment On April 16, 2014, at 1:33 PM, TMFGemHunter wrote:

    By the way, I absolutely agree with you about the low-end phone market. It's essentially meaningless to compare sub-$199 devices (unsubsidized) with high-end $500+ models under the vague heading "smartphones". I think it could make sense for Apple to eventually sell an entry-level phone for $350-$400 unsubsidized, but it's not worth competing at lower price points.

    Adam

  • Report this Comment On April 19, 2014, at 12:19 PM, larryw101 wrote:

    Adam Levine is an absolute fool and therefore is well suited to write for Motley.

    Motley has lost all credibility with me.

  • Report this Comment On April 23, 2014, at 4:46 PM, TMFGemHunter wrote:

    Voila. A great quarter for Apple, but indeed the iPad is the weak link. Unit sales down 16% year-over-year, and revenue down 13%.

    On a fiscal YTD basis, iPad unit sales are now up slightly, and iPad revenue is down slightly. If that's not a problem for a product in a 4-year old growth market, then I don't know what a problem would look like.

    Adam

  • Report this Comment On June 23, 2014, at 12:36 PM, emarshall12 wrote:

    Thank you for the information. Technologies like this will always be competitive. I find that iPad accessories can be more affordable than other tablets.

    Emily Marshall | http://www.fadsandmore.com/ipad-accessories-c-490_491/

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