As device sales around the world slow, Apple (AAPL, Financial) has been finding it extremely hard to keep its sales numbers moving. Though iPhone sales rocketed during the first quarter of the current fiscal, unit sales during the second quarter slipped by 1% compared to the prior period, as iPad sales declined by 13% and Mac recovered with a 4% growth rate.
Though most eyes will remain on iPhone sales as they account for nearly 70% of Apple’s revenues, Mac and iPad still account for a sizable portion. If these two product lines can keep growing, it will provide a lot of relief for Apple; unfortunately, it hasn’t been smooth sailing for the tech giant.
IPad sales have now declined for 13 consecutive quarters and, according to IDC, things could get much worse from here. One indicator of that is that worldwide tablet shipments declined by 8.5% during the first quarter.
In its report, IDC notes:
“The tablet market is comprised of two different product categories, which are headed in very different directions as noted by IDC in the past.
“Devices offering a first-party keyboard, which IDC refers to as detachable tablets, continue to grow for the most part. Many of these devices have quickly grown to resemble products that IDC refers to as traditional notebook PCs or laptops.
“The other product category is slate tablets (those lacking this keyboard option), which saw shipments peak in 2014 and is now in a steep decline that IDC believes will continue throughout the forecast period.”
IDC says that the growth of smartphones and our increasing dependency on them is slowly starting to eat into the tablet market. Apple is still the No. 1 player in the market, holding one-fourth of it in its hands, but market share has slipped from 25.9% during the first quarter of 2016 to 24.6% this year.
As you can see from the chart above, sales have dropped nearly 40% in the last two years. In first-quarter 2015 Apple sold 21.4 million iPads; in first-quarter 2016 it dropped to 16.1 million units; that number was down to 13 million in the first quarter of this year.
It’s about time Apple shook up the market with a strong product, like a new iPad that can fire up people’s imaginations rather than be just another incremental upgrade. If that doesn’t happen, it is going to be an uphill task for the company to get its tablet numbers moving up again.
Disclosure: I have no positions in the stock mentioned above and no intention to initiate a position in the next 72 hours.
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