Tim Cook
Apple CEO Tim Cook

Apple’s iPad sales are showing a decline that’ll worry fans of America’s favorite tablet (well, maybe not so favorite any more?).

Some sources claim that “Apple had another amazing holiday quarter,” with Cupertino reporting “record quarterly revenue of $75.9 billion and record quarterly net income of $18.4 billion.”

But the fourth quarter of 2015 also saw iPad sales fall 25 percent year-on-year, from 24.4 million in 4Q2014 to 16.1 million in 4Q2015. And this raises concerns over Apple’s longer-term tablet strategy. The new high-end iPad Pro hasn’t managed to turn around a steady decline in iPad sales since these peaked in 4Q2013 at around 26 million.

Naturally, Apple doesn’t sound too pessimistic, having just delivered the largest quarterly profit of any company in history, and with some other strong numbers and growing business areas to report. Tim Cook, Apple’s CEO, said: “The growth of our Services business accelerated during the quarter to produce record results, and our installed base recently crossed a major milestone of one billion active devices.”

It’s just as well that 1 billion user base is throwing off strong services income, though. Because iPhone sales are also essentially flat with just 0.4 percent year-on-year growth to 75 million devices for the quarter. Cook also forecast that iPhone sales are actually expected to dip for the first time in the second quarter of 2016.

Yes, the global tablet market is also shrinking, so this isn’t exclusively an Apple problem. But part of that shrinkage is supposed to be due to competition from phablets and smartphones. Apple’s iPhone growth self-evidently is not rising to take up the slack in iPad sales.

It’s hard not to conclude that Apple is looking at a shrinking walled garden, unless it comes up with the new breakout product that other analysts are calling for. The iPad Pro clearly wasn’t it. The Apple Watch doesn’t seem to have been a breakout category definer either. And I strongly suspect that the competitive pressure from Android devices and especially Amazon’s $50 Fire is tougher than it’s ever been. It’d be interesting to know how much of that 25 percent holiday season decline came out of competition from the Fire, which was out there in the market for the first time this last quarter. A $50 iPad Mini, anyone? Stranger things have happened …


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