Can The iPad Pro Revive Apple’s iPad Franchise?

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Apple‘s (NASDAQ:AAPL) iPad business has been struggling, with revenues falling by about 36% over the last three years, underperforming the broader tablet market. However, Apple appears to be tweaking its tablet strategy with the introduction of the iPad Pro lineup –  targeting enterprises, creative professionals and power users with tablets that have an increasing focus on productivity, rather than just content consumption. While it’s unlikely that these new devices will drive meaningful volume growth for the company, they are essentially a margin play given the premium price points – $600 for the recently launched 9.7″ version to $1080 for fully loaded 12.9″ version. Below is a brief run down of the iPad’s recent sales trajectory, why the device has been struggling and how the iPad Pro could provide some upside.

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How Can The iPad Pro Series Help?

  • Targets the professional and “prosumer” users who value tablet form factor, offering a powerful productivity-focused device with keyboard and stylus options.
  • While this market represents a niche, it should be more immune to the trends impacting the broader tablet market.
  • Allows Apple to enter the burgeoning “Detachables” space (75% growth projected for 2016 per IDC), taking on the likes of the Microsoft Surface.
  • Enables Apple to bolster iPad ASPs. The 9.7″ Pro Model sells for $600 (50% premium over iPad Air 2)while accessories retail for $100+.

References:

1. A majority of Canadians use tablets this year,  eMarketer, May 2015

2: Estimated users per tablet by dividing the number of tablet users globally by the global tablet installed base.

3: Did you know that smartphone screens nearly doubled in size since 2007?, Phone Arena, December 2014

4. Convertables forecasted to cannibalize traditional tablets, Techradar, December 2015

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com

2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Apple 

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