Subscribe / Unsubscribe Enewsletters | Login | Register

Pencil Banner

Replacement cycle dilemma dogs the iPad

Gregg Keizer | Oct. 17, 2014
Apple will introduce new iPads today in the hope they rejuvenate sales, whose growth has slumped in the first two quarters of 2014.

Apple will introduce new iPads today in the hope they will rejuvenate sales, whose growth has slumped in the first two quarters of 2014.

But the expectation by analysts is that Apple won't offer enough to convince current owners to ditch their aging, or even aged iPads, and that Apple must, like PC makers today, learn to live with a longer refresh cycle than it might have once anticipated.

"The big questions are two-fold. First, what are the upgrade cycles for people who are actively using their iPads?" said Jan Dawson, principal analyst of Jackdaw Research. "Second, how many people bought it, used it, but are no longer really using it? It's sitting in a drawer or maybe used only infrequently. Those people are not going to replace them ever."

The refresh cycle, the term for the time between buying two similar devices, harks back to the PC, whose sales have historically been driven by the cycle, especially in businesses. PCs, too, have been plagued by a refresh problem as some of the blame for the 11-quarters-and-counting sales contraction has been laid on a lengthened cycle.

Likewise, much of the blame for the iPad's disappearing growth — in the first quarter, sales were down 16% compared to the same period the year prior, and in the second, were off 9% — has been placed on a longer-than-expected refresh cycle.

The contention is by now well-worn: When the iPad debuted, experts anticipated that the refresh cycle would be similar to the smartphone, which in the U.S. at least is around two years, driven by the 24-month contracts which subsidize sales. Turns out, however, that tablet refresh is longer. Maybe much longer.

The problem is that analysts still don't have a good handle on the length of the iPad refresh cycle.

"It's about three years," said Dawson.

"We think it's about 21 months," said Carolina Milanesi, chief of research at Kantar Worldpanel ComTech.

But according to Kantar's surveys, 46% of the consumers polled are using iPads between 2.5 and 4.5 years old.

The longer-than-expected refresh cycle is not necessarily an indication of the lack of interest in the iPad, argued Milanesi, who pointed out that 54% of the people Kantar surveyed said that they would hand down any replaced iPad to an immediate family member, friend or relative.

Dawson echoed that, reiterating an earlier analysis where he noted that the pass-along factor was keeping iPads in use, thereby expanding the user base and, thus, Apple's tablet ecosystem — even though sales had slowed.

Tablets in general, the iPad in particular, face other headwinds this year besides the refresh cycle, of course, ranging from cannibalization from larger-screen smartphones and a lack of major changes to the form factor, either inside or out, to diminished interest on the part of developers because of App Store policies that bar trials and paid upgrades.

 

1  2  Next Page 

Sign up for Computerworld eNewsletters.