Apple reported its quarterly earnings yesterday, and to no one's surprise the company raked in record revenues and profits. A stock split - designed to make shares more affordable for regular folks - and a boost in the dividend sent shares soaring.
That's the good news.
The bad news: iPad sales are down for the first time since the iconic tablet was first introduced in 2010. In the year-ago quarter, the company sold 19.4 million iPads. This last quarter? 16.35 million. That's a drop of almost 16 per cent.
I wrote an article for Yahoo Canada: Fading iPad sales mark the end of Apple’s big bang era
CEO Tim Cook tried to explain the drop, saying variations in the supply chain, and a big backlog of iPad minis after the holiday season rush, contributed to the wonky numbers. But in the end, weakness in a flagship product is worrying for the company's longer-term prospects. Could your next tablet be an Android-powered device instead?
My thesis: Everyone's waiting for the Next Big Thing from Apple. It could be either a watch, a TV, a fitness device, a dog translator, etc. And when it launches, they expect it to end Apple's long-ish period since its last major new category-creating product (the iPad) and power its next major chapter of growth.
Unfortunately, relying on the tech equivalent of a hit record is so last decade. Going forward, Apple's best prospects lie in larger numbers of smaller products, all of which somehow connect to its current iPhone (and by extension iPad) franchise. When all smartphones look like sleek slabs of metal and glass, software becomes the only way for the company to truly differentiate itself from its competitors. We're getting a glimpse of this with the recently announced CarPlay in-dash technology. It's only a matter of time before Apple-enabled cars make it a no-brainer for drivers to buy Apple devices, too, so that they can get the most out of them.
So if you covet one of the latest iPads, buy now before they're radically redesigned. And if you were planning on camping out for a week later this year to be the first on your block to have an iWatch, you may want to cancel those plans. The future Apple just won't work that way anymore.
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Perhaps what Apple should do for the future (if they're not already doing it) is think of the iPad as a "gateway drug" to their other products.
If they altruistically offered up great deals to school boards, thereby getting, say, an iPad mini in the hands of school children everywhere, they will end up creating an entire generation of loyal Apple users just based on user friendly familiarity alone.
Then whatever drop they would see in the short term in profits would be turned into long term, sustainable growth in the future.
Back in the 60's Coca-Cola subtly discovered that if their jingles, signage and imagery of ads appealed to a 7-year-old, then by the time that 7-year-old was a teenager their brand loyalty was already well set (as a Coke drinker myself, I am well aware of my early brainwashing).
Apple is in an enviable position to grab the world's youth well before they have a buying power of their own.
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