The bad news has continued into the fall. Over the last eight weeks, tablet unit sales declined 16% and revenue dropped 18%.
Tablet unit sales declined across operating systems – both Android and iOS unit sales sank 16%. While Windows’ unit sales dropped 23%, revenue increased 11% compared to this period in 2013, due to the success of the $799 Surface Pro 3, one of the most expensive tablets on the market.
Hardest hit? 7-inch Android tablets with a 40% decline in sales over the past 8 weeks. Ouch. But it isn't just Android, we all know iPad sales are down too, and according to one generally reliable analyst, the outlook for Apple's tablet isn't looking so good either:
Kuo says Apple is employing oxide LCD technology for the larger iPad's high resolution display, affording quick response times and high color saturation. The company most recently deployed a large-format 27-inch oxide TFT panel in the iMac with Retina 5K display. Citing a time crunch on component production and assembly, the analyst doesn't expect iPad Pro to enter mass production until the second quarter of 2015 at the earliest.
You can blame longer hardware cycles for tablets vs. phones, lack of killer apps, the rise of phablets, and even category malaise, but clearly not everything is OK in Tabletville.
That isn't necessarily bad news for Apple though, because if the rise in phablets is indeed cannibalizing iPad sales, it just so happens to work out in Apple's financial favor, so much so that one might be inclined to think Apple is deliberately cannibalizing the iPad or at least the iPad mini. That's because margins for iPhone 6 and 6 Plus are markedly better than those for iPads, especially the iPad mini, roughly 70% for the phones versus maybe 50% for the iPad mini (obviously these are rough hardware only numbers that don't include labor, R&D, marketing costs, etc.). Given the 2-year life cycle of the phone vs. 3 to 4, maybe more years for an iPad, if you were Apple, wouldn't you want to push consumers to bigger phones, and away from, at minimum, smaller tablets (and underline the point by not emphasizing at all the non-refresh refresh of the iPad mini 3 at an iPad keynote event)?