While the global tech giant Apple Inc (NASDAQ:AAPL) prepares to release the latest model of its iPhone, the street is abuzz with what this might mean for its flagship product, namely the iPad.
There is a slowdown of increase in the tablet sales in 2014. It is but natural for most people to predict that the iPad will take a back-seat as far as the company’s sales emphasis is concerned. However, in spite of an overall slow-down, sales figures for Apple Inc (NASDAQ:AAPL) in the second quarter summed up to 28% of the total with Samsung occupying the second rank with 18%. This explains why the company is justified on not giving up on its tablet since doing so would translate into surrendering its lion’s share of the market.
Amongst the reasons attributed to the decline in tablet sales, the foremost explanation that is cited pertains to the price of this device vis-à-vis smartphones. Not only are the latter cheaper but are characterized by a shorter replacement cycle too thus appearing to be more attractive to buyers. While the replacement cycle for a tablet stretches over 3-4 years, for a smartphone it does not extend beyond two years. An added factor is that of subsidies provided by wireless carriers and while tablets do not receive anything, the figure pertaining to iPhones is substantial enough to make an impact of the profit margin.
One of the reasons as to why Apple Inc (NASDAQ:AAPL) intends to hold on to its tablet is that the iPad plays an instrumental role in expanding the company’s iOS platform not to mention that it enjoys a stronghold on the premium segment. For the market at large this indicates a virtually zero-profit scenario for competitors like Lenovo and for Apple Inc (NASDAQ:AAPL) it means focusing on making up for revenue from users rather than tweaking the design and features.
What could be a better indication of the company holding on to its flagship product than the launch of a new version of iPad subsequent to that of its iPhone which is scheduled to occur in the recent future?
This article has been written by Vinita Basu and edited by Serkan Unal.