Apple Inc.(NASDAQ:AAPL) has a whole new range of products queued up for prospective buyers who are looking forward to splurge this holiday season. The challenge ahead of Tim Cook, at present, is to lure the multitudes into buying his range of products.
The company unveiled refreshed iPads and Macintosh computers earlier this week at an event at its Cupertino, California-based headquarters. The devices follow Apple’s introduction last month of larger-screen iPhones, a smartwatch and a mobile-payments system.
The lineup is ratcheting up Wall Street’s projections that Apple is entering a high growth phase, which Cook will now have to meet. The CEO is also facing calls by activist investor Carl Icahn to increase Apple’s value. Investors will get a taste of how Cook’s latest gambits are performing next week, when Apple reports fiscal fourth-quarter results on Oct. 20.
The new devices have fingerprint sensors that could make shopping online as easy as swiping a button. And in the case of the more expensive iPad Air 2, it is also faster, has a better camera, and is thinner than last year’s version. So thin, in fact, that Cook said it was skinnier than a pencil. To make his point, Apple produced a video where a laser beam shaved off bits of a pencil to make it as slender as the new tablet.
“It’s unbelievably gorgeous and look how thin it is. Can you even see it?” Cook said, holding the new iPad in front of an audience of journalists and Apple employees at the company’s Silicon Valley headquarters.
But it is not clear that making the iPad Air 2 the Twiggy of tablet devices will be enough to reinvigorate Apple’s iPad sales, which have slumped recently.
Analysts speculate that the new iPads will contribute to modest sales growth. What the new iPads will not do is bring back the incredible, triple-percent growth in sales that the iPad achieved in its first few years, starting in 2010.
“That was just crazy growth,” said Ben Bajarin, a consumer technology analyst for Creative Strategies. “The iPad has normalized because it’s mature. It’s not going to go back to 180% growth, but it is still growing.”
Now about that svelte look: Apple said the iPad Air 2 was 18% thinner and 40% faster than the last one, a surprising change — and a bit of an engineering feat — because Apple made the previous version thinner and faster just last year.
The iPad Air 2 also has a display designed to reduce reflections. The tablet has 10 hours of battery life, same as the previous version. It has a starting price of $500. The iPad Mini 3 starts at $400 — but it is not thinner than the last version. Apple has added a gold colour option to both models.
The fingerprint sensor in both tablets is called Touch ID. The technology is used to log into the iPad in place of a typed passcode. It can also be used to make in-app purchases with Apple’s new mobile payments system, Apple Pay, which will be available Monday.
The iOS 8.1 system, the next update for the software system that runs Apple’s mobile devices, will also be available Monday.
Apple has made big changes to its iPads more quickly than it has with other Apple products, like the iPhone, which has typically been redesigned every two years.
Why the difference? For one, an iPad gives Apple’s engineers more physical space to tinker around. And from a business standpoint, Apple has to do more with the iPad to maintain healthy sales.
In the second quarter, Apple’s iPad sales declined 9.3% compared with the same period a year ago, according to the industry analysis firm IDC. And the worldwide market for tablet sales is starting to cool. While shipments of tablets exploded from 18 million in 2010 to 207 million last year, they are expected to increase just 11% this year, according to another research firm, Gartner. Last year, shipments had increased 55%.
But the iPad is still Apple’s second-biggest moneymaker, accounting for about 10% of its profit. That is a long way from the iPhone, which accounts for about 70% of its profit, but still important.
So what should Apple do?
JP Gownder, a technology analyst for Forrester, said an iPad with a much larger screen, which is rumoured to be in development, would have the best chance to goose iPad sales to growth, though the new iPads would at least persuade people with older iPads to buy new ones.
However, Gownder said the fingerprint sensors and reflection reduction on the iPad Air 2 would be valuable to businesses. Field workers and technicians could make good use of the anti-reflection feature, and big corporations could use fingerprint sensors for security, he said.
Apple also made price cuts to some of its older iPads. The cheapest iPad is now the original iPad Mini, which costs $250, a reduction of $100. That move will be important for persuading people who were on the fence about buying an iPad, said Creative Strategies’s Bajarin.