Apple Inc. CEO Tim Cook Is Wrong About iPad Pros Replacing PCs

Apple (AAPL 0.03%) CEO Tim Cook really wants consumers to replace their PCs with iPad Pros. In a recent interview with The Telegraph, Cook asked, "If you're looking at a PC, why would you buy a PC anymore?" Cook then predicted the iPad Pro would become "a replacement for a notebook or a desktop for many, many people," who would "no longer need to use anything else other than their phones."

Image source: Apple.

That statement is a bold one, but it doesn't make much sense. Let's discuss three major reasons why iPad Pros won't render PCs obsolete.

1. Affordability
Apple has made solid progress in the enterprise market. iOS devices accounted for 64% of all mobile enterprise device activations during the second quarter, according to Good Technology's Mobility Index Report. However, that actually represents a decline from 72% a year earlier. During that same period, Android activations rose from 26% to 32%, and Windows' mobile enterprise share rose from 4% to 11%.

The decline of iOS can likely be attributed to the higher price of iOS devices, Android Lollipop's new enterprise features, and Microsoft's introduction of cross-platform Windows features. As I previously noted, the price gap between iPad Pros and Windows PCs could prevent it from dominating the enterprise market. The 32 GB version of the iPad Pro costs $799. The Apple Pencil and Smart Keyboard, respectively, cost an additional $99 and $169. Therefore, Apple's cheapest "laptop-like" experience for the iPad Pro costs well over $1,000. 

Since Tim Cook wants people to compare the iPad Pro to Windows PCs, let's do the math. For the price of one fully equipped 32 GB iPad Pro, a small business could buy six of Acer's 32 GB Windows 10 Cloudbook 11 laptops. Meanwhile, the 64 GB version of Microsoft's (MSFT -3.09%) Surface 3 costs just $680 with the Surface Pen and Type Cover.

2. Backward compatibility
Microsoft also has the advantage of backward compatibility. About 1.5 billion PCs worldwide run various versions of Windows. Many of these PC users might own tablets, but probably won't completely replace their PCs with an iOS tablet due to a lack of compatibility with older software.

The iPad can tap into Windows systems with virtualization apps or iOS versions of the same software, but it's a more restrictive solution than simply buying a new Windows PC. That's why sales of 2-in-1 Windows devices have been rising while sales of iPads have declined. With Continuum, Microsoft is offering a single OS across phones, tablets, and PCs that can instantly change modes. Meanwhile, iOS and OS X aren't seamlessly connected in the same way -- Apple's comparable feature, Continuity, only partially connects both platforms with notifications.

Windows 10. Image source: Microsoft.

Earlier this year, Cook told Fast Company that Microsoft wasn't "willing to lose sight of the shore" and "walk away from the legacy stuff." Yet it's that legacy stuff and their lower price tags that keep customers tethered to Windows PCs.

3. Niche appeal
When Apple launched the iPad after the iPhone, developers had to create scalable GUIs for different screen sizes. Many developers must do the same again for the iPad Pro, which has a 78% larger display than the iPad Air 2. If they don't, many apps could simply waste screen estate.

Adobe optimized its graphics apps for the iPad Pro, and many demos revolve around using the Apple Pencil in these apps. That's great for artists or graphics designers, but it's unlikely to convince mainstream PC users to buy iPad Pros. Walt Mossberg, the executive editor of The Verge, recently wrote that while the iPad Pro would make "graphics folks" happy, he recommended that "average users" avoid the device.

With the iPad Pro, Apple has come full circle with tablets. Fourteen years ago, Microsoft tried selling "Microsoft Tablet PCs," which were mainly marketed to digital artists. When Steve Jobs introduced the iPad in 2010, he broke the tablet out of that niche to reach mainstream users. With the iPad Pro, Cook shoved the iPad back into that niche.

Cook's asking the wrong question
The PC market has been weak this year, due in part to the launch of Windows 10 causing postponed upgrades. But the Windows 2-in-1 market remains strong, and research firms IDC and Gartner both expect the overall market to stabilize next year.

Instead of asking why people would want to buy PCs anymore, Cook needs to ask why people still need to buy iPads instead. Sales of iPads have declined annually for seven consecutive quarters due to stagnant upgrade cycles, competition from cheaper tablets, and cannibalization of the Mini by larger-screen iPhones. As a percentage of Apple's top line, iPad sales have plunged from 16.5% to 8.3% between the fourth quarters of 2013 and 2015.

Cook claims that enterprise deals will save the iPad, but I doubt that the iPad Pro will gain significant ground against Windows PCs in that crucial market. Cost and backward compatibility, which aren't big problems for Windows 2-in-1 devices, will remain tough hurdles for Apple's massive tablet to overcome.