Apple removes the iPad mini from its Apple Store. Source: Apple
Last week, Apple (NASDAQ: AAPL) had five iPad iterations: two larger form factors, the iPad Air and iPad Air 2; and three mini versions, appropriately named the iPad mini, iPad mini 2, and iPad mini 3. This week, the original iPad mini met the fate of the original iPad and has been discontinued from the Apple Store.
For those following the company, you're probably well aware of the "iPad issue." In stark contrast to the iPhone's massive recent success, the iPad has faced headwinds. For a visual perspective, here is Apple's quarterly iPad performance:
Source: Apple's 10Qs. iPad Revenue as Percentage of Total calculation: [iPad revenue/(Total Revenue Ex-iPad + iPad Revenue)]
Over the last year, not only has growth in Apple's iPad line slowed, it's actually shrinking with four straight quarters of declining year-on-year revenue. Last quarter, the company's iPad revenue was down nearly 30% from last year's total. To combat declining sales, should Apple continue availability of its original iPad mini with an enterprise-only focus?
An entry-level model that could mesh well with enterprise buyers
Apple's never been associated as a "cheap" brand. As a company with a reputation for quality, Apple has been able to price its line of gadgets at a premium to competitors as its apps, ecosystem, and devices are considered top notch. And while that's great for margins, it does exclude many price-sensitive buyers -- like enterprise buyers -- from choosing Apple's iPads.
And while this sounds like heresy, considering Apple's huge enterprise advantage, there are signs of tablet defections among businesses, government, and academia. In the first quarter, Good Technology reported Apple's first-quarter tablet activations were 81% of all activations. That's an amazing total, but it's down 11 percentage points from last year's corresponding quarter, as low-cost Android units are picking up market share.
How about a lower-cost, enterprise-focused unit?
Interestingly enough, Apple appears to be focusing on enterprise with a rumored iPad Pro. While unconfirmed, many reports state the unit will be a massive 12.9-inches and come out later this year. While the price hasn't been discussed, most expect it to be the most expensive iPad, since the touchscreen display is typically the largest part of a tablet's bill of materials. And while a high-resolution, large-screen 64-bit iPad with the latest and greatest processor is nice, the issue Apple faces in both the enterprise and personal tablet markets is it's become a "good enough" market defined by price-sensitive buyers trading down to lower-cost units.
For many small business owners that use an iPad for a cash register and point-of-sale device, or to access one of the company-specific apps Apple's working on with IBM, new processors and a sharp retina display aren't needed. But what is needed is a cheaper price point like the $250 deal for the original iPad mini that Apple recently offered. By keeping the original iPad mini and using the lower-cost unit to target enterprise customers, Apple could grow sales and continue its impressive streak of enterprise dominance.
