Apple's (NASDAQ:AAPL) long-awaited iPad Pro finally went on sale a little more than two weeks ago. Some pundits are already willing to call it a failure. In particular, it has drawn unfavorable comparisons to Microsoft's (NASDAQ:MSFT) Surface lineup.
That seems more than a little premature. The iPad Pro isn't exactly flying off store shelves like the iPhone, but nobody really expected that in the first place. The success of Apple's giant tablet will be determined primarily by its adoption in the enterprise market. Given the long lead times that are typical in selling tech to large companies, it will take at least a year or two to truly understand whether the iPad Pro is a successful product.
iPad Pro skeptics have noticed that early adoption of the newest iPad has been relatively slow. According to Localytics, by the end of its first week of sales, the iPad Pro represented only 0.3% of total iPad usage. That's a significantly slower adoption rate than that of the iPad Air or iPad Air 2. It implies that Apple may have sold about 0.5 million iPad Pros in the first week or so.
On the other hand, the iPad Air and iPad Air 2 benefited from upgrade demand from users of earlier iPads. If you had purchased an iPad 2, the iPad Air and iPad Air 2 were simply better versions of what you already had. By contrast, not every user of an older iPad will want a larger and more expensive one -- the iPad Pro needs to build a new market.
Additionally, iPad Pro adoption actually appears to be faster than that of the last three iPad Mini versions, according to Fiksu's iPad adoption data. Finally, supplies are still constrained, particularly for the Apple Pencil and Smart Keyboard accessories. As those supply constraints ease, adoption could potentially accelerate.
Doomed to failure?
Some pundits have gone even further, arguing that the iPad Pro is inherently doomed to failure due to design flaws. ZDNet's Jason Perlow argues that the iPad Pro is too big to carry around comfortably and becomes extremely bulky after adding a heavy-duty case.
Perlow wrote that he had spoken with several "executives" who had thought about purchasing one, but instead decided to keep their older iPads, or look at Microsoft's Surface Pro 4 for this reason. (The interest in the Surface Pro 4 is somewhat bizarre, as it's not much smaller than the iPad Pro -- and it actually weighs slightly more.)
However, based on Perlow's description of these purchase decisions, it sounds like these executives were considering buying an iPad Pro as a glorified toy. That's not why Apple partnered with IBM to create at least 100 industry-specific iOS apps.
Apple's enterprise push is aimed at equipping front-line employees with new tools to improve their productivity. Apple isn't trying to find thousands or millions of C-suite executives looking for a new computing device to carry around. It's looking for executives who might decide to equip hundreds, thousands, or even tens of thousands of their employees with iPad Pros.
Ewan Spence of Forbes also calls the iPad Pro a failure in the enterprise market relative to Microsoft's Surface. He notes that Windows tablet sales are projected to rise 58% this year, whereas iPad sales have been falling. Spence claims that the growth of Windows tablets "projects 'success' to consumers," even though Apple still sells more than twice as many iPads in a year as all Windows tablet manufacturers sell combined.
Of course, by that measure, Spence would have written off the Surface as soon as it came out. iPad sales were soaring in late 2012 and 2013, while Microsoft had to take a $900 million writedown in mid-2013 after its original Surface RT flopped.
Since then, Microsoft has changed its focus to Intel-powered Surface tablets and has gradually gained consumer acceptance. This just shows that a slow start doesn't necessarily doom a new product to eternal irrelevance.
Don't bet against Apple
We won't know for at least a few months whether or not the new iPad Pro is a hit. Even then, it will be too early to know whether it will be a long-term success.
After all, the iPad was a sales juggernaut for the first few years of its existence. (Tech commentator Farhad Manjoo predicted in early 2013 that it could overtake the iPhone in sales by 2015. Oops!) It has since faced a multi-year sales slowdown. Conversely, demand for Microsoft's Surface lineup has steadily grown despite terrible first-year sales.
The good news is that, even if the iPad Pro has some flaws today, Apple is likely to improve future versions, just as it has for the iPhone and smaller iPads -- just as Microsoft has improved the Surface over time.
Furthermore, Apple is starting from a position of dominance in the mobile enterprise world. Last quarter, it accounted for 71% of enterprise tablet activations, according to Good Technology -- even without the iPad Pro.
Even if a lot of the companies that already use iPads are interested in the iPad Pro, it's unrealistic to expect that to drive rapid adoption. Large enterprises tend to be quite slow and deliberate about evaluating and rolling out new technology products. Yet slow-and-steady progress could make the iPad Pro a meaningful contributor to Apple's profitability within the next few years. Ultimately, that's what investors should really be looking for.
Adam Levine-Weinberg is long January 2016 $80 calls on Apple, short January 2016 $120 calls on Apple, and short January 2016 $140 calls on Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool recommends Intel. 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.