The iPad clearly isn't going away, but it isn't taking over computing in the way everyone predicted either. If the rumours of Apple making a larger iPhone come true that could hurt iPad sales even more.
Aside from anything else that makes me ponder the wisdom of Microsoft's tablet-heavy focus on Windows 8.
I think people vastly overestimated the growth trajectory of the iPad, and tablets in general. Taking off from zero, it's very easy to see very exciting growth trends and just assume they'll continue.
But any ecologist will tell you that exponential and logistic growth look very similar...until all of a sudden they don't.
The iPad was a global product with an existing application base from launch. The first iPhones were geographically (and operator) limited and didn't even support 3rd party apps.
Are you sure? I thought that the first iPhone was only sold by AT&T in the US at least initially?
I'm pretty sure that they weren't sold outside the US at least to start with.
Wikipedia says this[0]:
Jobs unveiled the iPhone to the public on January 9, 2007, at the Macworld 2007 convention at the Moscone Center in San Francisco.[34] The two initial models, a 4 GB model priced at US$ 499 and an 8 GB model at US$ 599, went on sale in the United States on June 29, 2007, at 6:00 pm local time, while hundreds of customers lined up outside the stores nationwide.[35] The passionate reaction to the launch of the iPhone resulted in sections of the media dubbing it the 'Jesus phone'.[36][37] Following this successful release in the US, the first generation iPhone was made available in the UK, France, and Germany in November 2007, and Ireland and Austria in the spring of 2008.
On July 11, 2008, Apple released the iPhone 3G in twenty-two countries, including the original six.[38] Apple released the iPhone 3G in upwards of eighty countries and territories.[39] Apple announced the iPhone 3GS on June 8, 2009, along with plans to release it later in June, July, and August, starting with the US, Canada and major European countries on June 19.
> If the rumours of Apple making a larger iPhone come true that could hurt iPad sales even more.
I don't really see that. I own a Galaxy Note (read: HUGE phone) and yet I still own a tablet. A larger iPhone won't be as large as the Galaxy Note, it just isn't Apple's way, at most it will be similar to the Galaxy S5.
To me the iPad has a niche that it covers (e.g. reading books, larger "table" games, etc) and even a large iPhone won't cut into that business much. Even if the iPhone was Galaxy Note sized I'd still buy an iPad, only maybe one single use case would shift and that is a minor one.
I'm not sure you/we are typical, though. Do non-tech folks really spend $500 on a device to read books and play table games? If you were into reading, at least, I'd imagine you'd be picking up a considerably cheaper Kindle instead.
Well older people like a larger screen. The iPad is nice to provide your family with a Skype/Photo station, a easy to use browser and some small goodies ( whatever apps, or books )
Around me (lots of expats with kids) the iPad is a killer to give your family back home instant connectivity in as much maintenance free and foolproof package as you can get. ( no cable, no malware, no driver, understood and supported by your internet provider, always on, minimal learning curve )
My point of view is the opposite, how is it useful at all for tech people. I never found any business case where either laptop, desktop or smartphone was not more convenient (the exception is reading, but I'm part of that minority that prefer to read on their smartphone)
We got my father an iPad for Christmas, mainly for reading (although he uses it for games now too). He very explicitly didn't want an e-reader. He liked the screen much better and found it easier to read. My mother has a Kobo (and my sister a Kindle) so he knew what those were like. My sister has since bought an iPad Mini. She uses it for a number of things, including yoga videos when she's not at home.
Then what, may I ask, do you think people use their iPads for? Because last I checked they were content consumption devices (books, apps, movies, etc). However a lot of that content doesn't directly translate to the iPhone (e.g. books, movies, and some larger games/app which won't work on smaller screens).
I bought a Kindle Paperwhite recently and realized I enjoy reading on my phone almost as much. Made me kind of want a tablet, actually.
I remember getting a tablet a while ago with a Pixel Qi screen that essentially doubled as an e-reader... wonder where that technology (and the Qualcomm Mirasol etc) all went.
Yes, actually they do - but the thing is, they don't replace them as often as phones.
iPad 2 is still a good device for reading and browsing the internet - hence people just don't throw it in the trash after 2 years and buy a new one like phones.
The problem is that iPads keep on going, and going, and going. They're incredibly robust. They start with a long battery life leaving plenty of room for battery decay while still having useful run times. Current apps generally run fine on older devices. Even when they don't an old iPad can still perform many useful functions such as email, video playback, maps, reading ebooks or pdfs, web browsing and slightly older or casual games.
It's beginning to look like their average useful life is far longer than that of a Phone and also longer than a desktop or laptop. As a result the replacement rate may be fairly low. I'm in the market for another iPhone this year due to contract exipiry, but my household has reached iPad saturation. The kid's Minis are still going strong and we bought an Air last year after giving our '2' to a relative and it's still going strong too. It's hard to see when or why we'd need to get a new ipad as long as any of our current ones still work. That's probably another 3 years at least, possibly 5.
The iPad is going to incrementally get better and more capable (in terms of specs and software) at a much faster rate than PCs will. Some OEMs have left the PC business and others are under-investing in it given the trend in the PC market. Even Intel has delayed Broadwell which is likely a result of trying to control CapEx (they certainly cancelled a new factory recently because of it). I think in the fullness of time the iPad will gain at the expense of PCs, they're just much more pleasurable and approachable for most people (and I can imagine a scenario where an iPad would dock with a typical monitor and keyboard setup and be powerful enough to handle most "heavier" computing tasks for people).
Tim Cook mentioned that in emerging markets iPads grow much faster and that's likely because it is their main computer.
Also I don't think Apple is too worried about a larger iPhone cannibalizing iPads. A larger iPhone would likely sell for $750 (for 5.5 inches) which is much more than most people spend on an iPad and likely carries higher margins.
> Tim Cook mentioned that in emerging markets iPads grow much faster and that's likely because it is their main computer.
In emerging markets, the most common "main computer" isn't a tablet, it's a smartphone, by a mile. That points directly at the iPad's huge emerging-markets weakness. A "good enough" phablet (or even just a cellular tablet since many enable phone capability outside the US) can be both more useful and cheaper than an iPad + phone (let alone smartphone) combination. That seriously limits the iPad's addressable market in a way you don't see in the developed world (where more generous budget constraints and sometimes phone subsidies change the tradeoffs).
Some friends of mine in Vietnam run a shop, in Hoi An. They make a comfortable for local standards income, but after tax rates and costs they will have about $10k a year, not to be sniffed at, but still, not amazing income. A younger sister wanted an iPhone, it was a running joke that if she bought one, she would be sleeping out in the pig sty, the 'adults' (those over 20) consider such things excessive waste of money, but she being 17 decided to spend her 3 months wage on a second hand iPhone 4. This isn't un-common, her peer group all feel the need of it. She could have had something like a Nokia 620 which has all the apps she uses anyway, for a fraction of the price and it would have the benefit of new battery life performance.
Hell I've seen shoes with the Apple logo put on them[0] there is most definitely a lot of brand power and loyalty in Vietnam and China. If they can ensure that people end up with the 'correct' Apple and not a nock off, they could do quite well. The fact that kids know how to tell the real iPhone from the fact clones is enough, as they create peer pressure for the real thing.
So yes, I can see Apple benefiting from a bunch of people in the emerging markets feeling they've 'made it' when they can afford an iPad, they still are a long way of affording a car.
That isn't a great metric without examining the pace of sales in the developed world, so you know what you're comparing. And has no connection to phone sales.
I can imagine a scenario where an iPad would dock with a typical monitor and keyboard setup and be powerful enough to handle most "heavier" computing tasks for people
So then the question is - why have a separate OS for tablets as compared to laptops? The current reason is not so much to do with the UI but more to do with management of limited resources. OS's like iOS and Android are very aggressive about preserving memory and processor cycles as a way of squeezing extra life out of batteries.
On phones that different-OS resource advantage will probably continue. But on tablets, its less clear. As the intel chips get better at low power, a tablet running a 'full fat' operating system becomes more feasible.
This is what the Surface Pro 3 shows, whatever you think of it as a device: You _can_ run a full OS on a powerful processor in a fairly thin, fairly light tablet. Not the thinnest, and not the lightest, but still it raises the question: Why do tablets need a different OS?
Microsoft are tackling that question now, I think Apple will ultimately need to tackle it as well.
Honestly I think primary reason that iOS tablets have been successful is because they have a different OS. Fundamentally iOS is far less capable but also far less difficult to use and fragile than a full-fledged OS. A tablet is less PC and more consumer electronics. And that's not a hardware distinction, it's a software distinction.
I disagree. Layering a new UI on top of an existing OS is a lot of work, but ultimately thats all it is - another layer. What iOS and Android do that is fundamentally different to OSX and other desktop OSs is not so much to do with the UI, its to do with quickly killing or hibernating any process that isn't being used right at that time.
When you learn to write an app for iOS or Android, the first thing you learn is that your app needs to be ready to freeze and save state at a moments notice, and then re-hydrate itself later, also at a moments notice. This is the fundamental difference in the OS, not the touchscreen and widgets.
This app-nap functionality is available in OS X too so long as the app implements the correct APIs, which many do. This was introduced in 10.8 as part of their performance effort I believe.
This is seen in OS X when an app window appears greyed out with a progress spinner in the center. The app may start out in this state if the machine was hibernated, or it may go into this state if it is open but it fits certain criteria, like all its windows being occluded by others. When this happens, the process is killed.
In my scenario I imagine the iPad customer as primarily getting their computing done on the tablet but having the option to use a larger screen for certain edge cases (mostly to illustrate the increase in capability over time). I don't think tablets will completely subsume PCs and that PCs will have a role to play for people who actually need it. Having a separate OS designed for that interaction model will net an overall better experience without having to make compromises in some way.
A great project tacking this now. I am really hopeful for them but suspect they will be an early technology superceeded by MS/Apple when they realise the market demand for this is now:
China alone has more people that can afford an expensive phone/tablet than can in the USA (the USA has a higher % that can). India likely has more than the USA, if not they will in 5 years. Indonesia has many people that can…
The percentage of income spent on such gadgets (and cell phone plans) etc. is much higher for most customers in the non rich countries (essentially OECD) but those non-rich countries have over a billion people that are willing to spend a lot of money on gadgets.
And beyond those spending a lot of there money on gadgets in non-rich countries, there are hundreds of millions that are actually wealthy even in comparison to the USA in China, India, Indonesia, Brazil, Thailand etc.. The countries economies are changing amazingly quickly. Overall many are still extremely poor but many are also as rich enough to be above median income in the USA.
I am pretty sure there are way more people above median USA income outside the rich countries North America, Europe, Japan (and go ahead and include Korea, Australia and New Zealand) than live in those rich countries.
Emerging markets != 3rd world countries. Cook is referring to China, and there is plenty of money here. I believe their Sanlitun store in Beijing has the highest per-day gross of any other store in the world. And they have just begun to make inroads in 2nd and 3rd tier cities, where there is also money.
India also has an emerging middle class, though nothing like China yet.
Yeah, it feels like people wanted the iPad to be the next iPhone, to fuel continued growth. But it may just hang out at that 15% of revenue, like the Mac, and it's ups and downs just don't matter that much to the overall picture.
I think people just want enough computing power(not tablets or desktops) to plug in and join in on the internet fun. They also want a screen just large enough(not too large, no ipads) to properly enjoy media content.
Thus I think a slightly larger iPhone screen(given their higher resolutions compared to competitors) will be the sweet spot. It'll likely dominate older iPhone models pretty quickly and cannibalize iPad sales.
It will likely be cheaper but still retain it's appeal to the upper class as a status symbol(people can trot around with their new larger iPhone).
I wouldn't say that the smartphone industry is converging on some single ideal form factor or feature set. I think everything is just changing because people want things that are new and different. For the last 2 years, phone screens have obviously been getting larger, and it looks like even Apple is caving in on that. But I wouldn't be surprised if, in the next two years, there's a new trend of making phones amazingly small again. First it's "look how much bigger our screens are than last year's phones!" and then it's "look how much more compact our phones are than last year's phones!"
Why would it? I have one. It's a great tool for reading, watching movies, replying to e-mails, etc. but you can't do real work on it. It's not just the small screen and interface but also the heavily restricted OS that can only run a small subset of apps (with lots of rules like 'no emulation').
Desktop won't go away unless iOS and Android grow to encompass desktop functionality and flexibility.
> If the rumours of Apple making a larger iPhone come true that could hurt iPad sales even more.
And when the iPad first came out, it hurt iPhone sales a lot. Apple call this "cannibalization" and they've stated many, many times they don't care one bit about it.
That wasn't GP's point. Whether Apple cares or not, if a larger iPhone hurts iPad sales, that's another reduction in the potential scope of tablet computing.
Why would you expect a larger (than current) iPhone to be running iPad apps?
Even a 5.5 inch iPhone would be closer in aspect ratio and size to a 16:9 4 inch iPhone than it would be to a 4:3 7.9 inch iPad Mini (let alone a full-size iPad). to me, that makes it obvious it would run scaled-up iPhone apps, not scaled-down iPad apps. In other words, a larger iPhone will clearly be on the "phone" side of the phone/tablet line.
If you want to argue that it is all a continuum and that the scope of touch-based computing hasn't changed, I'd agree with that. But in a thread that started by talking about iPhones, iPads and Windows 8, "tablet computing" is more specific than that.
Not really. Even Apple will tell you that Excel is the best software to do serious spreadsheet work on a Mac. Numbers is for consumer oriented / home budget applications.
It’s worth mentioning that a company owner who saves up money in their company (and thus pays only the corporate tax rate) will have to pay capital gains tax if they later withdraw money from the company.
IMHO a company should generally not save up large amounts of money unless there is a purpose, for example building up a reserve for worse times, acquisitions, or for a small business, saving up for pension.
In Apple’s case, the shareholders are the owners, and they are paying capital gains tax on the dividends.
I don’t necessarily think the tax laws are good or fair, but comparing your income tax rate with Apple’s effective corporate tax rate is comparing oranges and bananas.
Careful. Liberal economists support reducing or eliminating the corporate income tax if you offset it with drastically higher personal income tax on wealthy people along with an elimination of the capital gains tax rate, and you prevent corporations from becoming vehicles for making pre-tax political contributions.
In other words: liberal economists don't support eliminating the corporate income tax in the real world.
> Liberal economists support reducing or eliminating the corporate income tax if you offset it with drastically higher personal income tax on wealthy people along with an elimination of the capital gains tax rate, and you prevent corporations from becoming vehicles for making pre-tax political contributions.
Yes, absolutely. But as liberals, let's be indignant about the impossibility of what you describe, rather than the impossibility of getting Apple to pay the same tax rate as an individual.
There is a broad consensus among liberal and conservative economists that a corporate tax rate above zero is a dumb idea.
Not quite. To add to tptacek's earlier comment: Planet Money's feature was strongly criticized afterwards for mischaracterizing the panelists's opinions, and overselling them as full-fledged policy positions [1,2]. Besides, the members were not representative enough to reliably infer a "broad consensus" from their agreements alone.
Or more accurately, top marginal tax rate. A lot of folks don't seem to realize that if they enter a new "tax bracket", only the taxable income above that threshold is taxed at the top rate.
They don't "off-shore" their money in the sense of an active move out of the U.S. They earn money abroad and leave it abroad rather than pay tax to repatriate it to the US.
I'm still yet to hear why a US company should pay tax on revenues earned outside the US. This goes for Google and Microsoft too. What has the Federal Government done to earn the tax?
A couple reasons come to mind (not all mine, nor do I necessarily agree with them):
For one, US citizens are expected to pay taxes on money they earn outside the US, even if they reside outside the country. This, in and of itself, rubs people the wrong way. In some cases, Canada comes to mind, your US taxes are reduced by what you paid to Canada. This isn't the case everywhere. The more people-like corporations become, depending on your politics, the more likely you are to feel like the tax law should treat individuals and corporations similarly. Yes, this ignores a lot of the actual economic realities of corporations, but feelings and politics be damned :).
Two, the fact that the corporations in question are housed in the US means that somewhere along the line, there is likely some sort of tax break, credit, loan, law, or incentive program that they've been given to advantage them. After all, what large corporation doesn't have lobbyists and large building projects that can get funding from state and local governments. Some industries get subsidies directly from the government (The oil industry's subsidy being a popular one for political bile). Additionally, like people, corporations benefit from functioning civil services, roads and highways, and the protection of the military. These are all things that cost money (and no, lobbying dollars aren't going to cover that :).
Lastly, if you're more socialist leaning you likely wouldn't mind seeing a social safety net of some kind like a universal government stipend. Large corporate profits seem like an ends to a means in terms of executing that. I don't think a majority of US citizens feel like that's a great plan, but I've heard it suggested by some very left leaning thinkers.
That's not at all true. They beat earnings. It's the forward looking guidance that looks concerning, but it's a faux number because Apple has talked a lot about their product pipeline but the forward guidance doesn't include any new products.
It was definitely below street expectations for revenue, and number of units sold.
Tim even admits this on the call:"iPad sales met our expectations," Cook says, "but we realise they didn't meet many of yours."
So they beat EPS, but they were below estimates on shipping both iphones and ipads.
It's only because they increased margins that they beat EPS.
Heh, on the conference call, someone asked them why they beat their gross margin guidance for the 3rd quarter in a row, when these are supposed to be realistic numbers now.
Hardly, I think most people are responding negatively to the fact that their Q4 projections look exactly like what they did in Q4 of last year (http://www.apple.com/pr/library/2013/10/28Apple-Reports-Four...), so staying flat during the holiday / back-to-school season year over year probably got some people worried that the magic is fading. They did payback nearly 50 cents a share in dividends, so its not all crazy times.
Edit: Oh, and that ipad number I missed that the first time, they could really use something magical there.
Nicely splits back to school and end of the year buying between two quarters. Given their back-to-school quarter is going to be flat suggests they have less confidence in their 'send your kid to school with a Mac' campaign.
Personally I was all set to get the large form factor iPad but will get a Samsung Note Pro instead.
What's convincing you to choose Samsung Note Pro instead of an iPad?
Personally, I'm looking at Microsoft Surface Pro 2 instead of any tablet, because it's not just a tablet, but an x86 PC that can run Ubuntu (yes, 2, not 3, because larger size and loss of Wacom digitizer while retaining the same hardware don't look like improvements to me). I even think Apple will present an "iPad Pro" along these lines, this year, with a killer feature of being able to run OS X apps. I don't live in Apple-land and I don't want that, but it should be popular.
The 12" screen and the better digitizing pen. My application is much more notes/sketch focused. I've got several different stylii for the iPad, none of them is as nice as the Note's pen. I like the larger size so that I can see more of the sketch even while zoomed, I don't care about having it in my pocket. The contenders were something like a Yoga 2 pro, the Note pro, or something from Apple. They don't have anything in that space so for that reason, they're out.
What kind of digitizer is there in Samsung Note Pro?
If you are so flexible as to consider Android, iOS and Windows, you should consider Microsoft Surface Pro 3, too. I am really interested to know your opinion; my email is in the profile if you will actually look into it and decide to share. For me, Microsoft tablets are an overseas shipping order away, so I hesitate a lot before buying a completely new piece of hardware.
Aside from anything else that makes me ponder the wisdom of Microsoft's tablet-heavy focus on Windows 8.