As growth in tablets slows, Apple is under pressure to get iPads into shoppers' hands this holiday season.
Fortunately for Apple and other gadget makers, there remains plenty of interest in tablets, with the device ranked as the most-wanted tech item on holiday wish lists, according to Consumer Electronics Association’s annual Holiday Purchase Pattern Study. Consumer spending on electronics is projected to increase 2.5 percent to $33.8 billion, the highest level since the association began tracking it in 1994.
“Christmas is really intense,” says Jean Philippe Bouchard, an analyst at IDC. “The seasonality of the fourth quarter is really, really strong.”
Here are five figures that should give Apple holiday cheer—and fear—about the prospects for the iPad, the company’s second-largest product by revenue:
$29: That’s the price Wal-Mart Stores advertised for 7-inch RCA Android tablets at its Thanksgiving Day sale, underscoring the rise of ultra-cheap tablets in the market. RCA's global shipments rose 194 percent in the third quarter, according to IDC, and probably did well on Black Friday with deals like those advertised by Wal-Mart.
“It’s not a direct competitor with the iPad—it’s a totally different market,” said Rhoda Alexander, an analyst at IHS Technology. “Where RCA becomes more of a factor is for the Android universe.”
5.2 percent: That’s the percentage gain in U.S. tablet sales during first three quarters of 2014. Bouchard predicts the fourth quarter will show a “bit less” than last year’s 26.3 million shipments. U.S. tablet shipments rose 11 percent last year and 46 percent in 2012, according to IDC.
Worldwide growth in tablet sales will be 7.2 percent, according to the market researcher, compared with a 53 percent surge last year. “It’s definitely going to be a category that will do well during the holiday season in absolute terms but have a hard time finding growth.” says Shawn Dubravac, chief economist for the Consumer Electronics Association. The challenges are getting people to buy the device for the first time, getting existing users to upgrade to the latest gadget and convincing them they need more than one in the household, he said.
3 years: That’s the average life span for the use of an iPad after purchase, according to IHS. When iPads first arrived in 2010 some analysts predicted they’d have a similar life cycle to smartphones, which tend to get replaced every couple of years as users renew with cellphone contract incentives in the U.S.
Instead, the tablets are being used longer, approaching a laptop’s lifecycle of 4.5 to 5 years. “Part of the challenge for Apple, I believe, is that they built a better light bulb,” IHS’s Alexander said. “The product is amazingly rugged.”
6.1 millimeters: Cook revealed the iPad Air 2 in October that’s 18 percent thinner than the previous model, making it just 6.1 mm thick. Those shaved millimeters, along with a lighter weight, are touted as the gadget’s main selling points, along with a faster processor and TouchID security feature. The changes will make iPads the “go-to tablet gifts this year," Brian White, an analyst with Cantor Fitzgerald, wrote in Nov. 24 note to investors.
While the latest iPads are a significant upgrade from a few years ago, they’re not that much different from last year’s. “For average users, they represent only a modest evolutionary improvement over last year’s models,” Walt Mossberg, Recode’s tech reviewer, wrote about the new devices.
45 percent: That’s the percentage of total U.S. tablet sales for 2013 that occurred during the last three months of the year, according to IDC. Of Apple’s total iPad sales last year, 35 percent came in the period that ended in December. It was the only quarter in the 2014 fiscal year that iPad sales rose. The industry’s growth last holiday season came from the introduction of new iPads, Bouchard said. “This year we don’t think we’re going to see same impact,” he said.