Apple's anticipated iPad Pro is now available for purchase. Source: Apple
Although it's often said that Apple (AAPL 0.15%) is a bifurcated company, with its iPhone business shining while the rest of the company stagnates, that's an incomplete statement. For example, in the recently reported fiscal fourth quarter, Apple experienced year-over-year revenue growth in four of the five reported product categories, with the catchall other products category registering robust 61% growth, presumably on the basis of the Apple Watch.
The problem, obviously, is with the fifth product category: the iPad. Overall, there are two factors working against Apple's iPad. First, the tablet industry is experiencing a slower-growth market amid a longer-than-expected refresh cycle. Second, many new entrants are choosing to buy lower-cost tablets over high-end units from Apple and Samsung. This double-whammy has been especially tough for Apple iPad sales, as the chart below shows:
Source: Apple's quarterly reports. Revenue figures in millions.
So as you can see, over the last four quarters Apple's reported four consecutive year-over-year revenue decreases from the iPad with the best quarter resulting on a nearly 20% decrease. More recently, Apple just released its newest iPad offering -- the 12.9-inch iPad Pro -- and IHS Technology expects strong sales from the unit. But it doesn't appear the unit will be enough to reverse the company's slide.
IHS says 2 million units shipped
According to the analyst-research firm, bigger is better. Noting the 11-inch and larger tablet market accounted for 3.1 million units in 2013, and will increase to more than 10 million tablets this year, IHS' data shows larger tablets are a growing segment in an otherwise slowing market. For Apple, the company estimates the company will ship nearly 2 million units in 2015 and the company thinks demand will easily outstrip supply.
At a price point of $799 for the cheapest unit, and assuming these shipments are all sold through as IHS assumes strong demand, this would result in iPad Pro revenue of nearly $1.6 billion. This one product would represent roughly 18% of Apple's $9 billion in iPad sales it reported in its seasonally heavy first fiscal quarter of 2015, and that figure does not take into consideration cannibalization.
It should be noted IHS' figure is lower than Apple supply chain analyst Ming-Chi Kuo from KGI Securities, which estimated sales of 4 million to 5.5 million.
What about the enterprise?
Perhaps comparing the iPad Pro's initial sales figures is not the best way to gauge the product. If the company is looking to position this as an enterprise-focused product, then the seasonality effects consumer-focused devices are subject to won't apply. Recently, CEO Tim Cook stated the "iPad Pro is a replacement for a notebook or desktop." Enterprise-focused partner IBM (IBM 9.34%) has reported it is saving $270 per device by switching its PCs to Macs, assumptively those figures are even better if these enterprise users switch to iPad Pros.
And with its partnership with IBM, the company is focused on bringing a host of business and company-specific apps to market with its IBM MobileFirst for iOS initiative. It doesn't appear the iPad Pro will drastically affect the company's top line in the short-term, but its use in the enterprise should be carefully watched.
