Apple fields iPad Air 2 to breathe new life into tablet sales
The tablet industry's slowing sales have hit Apple's results. Can the company's newest device reverse that trend?
Apple's answer to the slowing tablet market is more of the same, just better.
CEO Tim Cook showed off a new model of the company's flagship tablet, dubbed the iPad Air 2 , at an event at the company's Cupertino, Calif., headquarters Thursday. The new device, he said, brings a slimmer profile, lighter weight and the addition of the popular fingerprint sensor used on the iPhone.
Among the new features, the company said its latest iPad is the thinnest tablet on the market, as well as being 18 percent svelter than last year's model. It contains a new chip called the A8X, which is faster than even the chip introduced last month in the iPhone 6. Apple has also added better display technology, including an anti-reflective coating. And the device has a better camera on its back.
The result, the company said, is a device that can compete against not only other tablets but even other devices, like video game consoles. "We're now able to deliver console-level graphics," said Phil Schiller, Apple's marketing head.
The move marks Apple's latest effort to expand interest in the large but slow-growing tablet industry. But instead of offering big jumps in technology a radically new take such as the smaller iPad fielded in 2012, or a cheaper price, the company's newest tablets amount to bumps in technical specifications, refinements and addition of features popular in the iPhone.
The iPad Air 2 will start at $499, as it has for the past four years, and come in a choice of silver, gray or gold colorings. Preorders begin Friday, and the device launches next week.
A tale of two events
Apple's enthusiasm for its newest iPad wasn't matched by Wall Street, where investors pushed the company's shares down more than 1 percent to $96.30. The stock has risen more than 30 percent over the past half year, though it's faltered in the past month after the latest iPhone launch.
In some ways, Apple telegraphed that it too knew the event wasn't a repeat of its blockbuster iPhone 6 launch last month. The company invited the press to a hall in its Cupertino headquarters, not the stage of grand theater like for the iPad Mini launch two years ago. The company also slipped up its marketing, accidentally publishing information about the iPad Air 2 and the update for the iPad Mini on its website Wednesday.
The company released its first iPad in 2010, drawing throngs of customers excited by the larger screen to interact with webpages and view movies. Sales were quick, and everyone from business leaders to grandparents had one. So far, Apple said, it has sold 225 million iPads and collected more than 675,000 applications made for the device.
"This is a huge advantage over our competition," said Cook.
But unlike in the smartphone market, where Apple's iPhone spars with Samsung for leadership, customers don't appear to be upgrading often. The model of wireless companies subsidizing phone prices is something that spurs people to buy new smartphones every couple of years. Carriers in some countries offer subsidies, for example, reducing the cost of the lowest price iPhone 6 to $649 to $199.
The iPad, which starts at $399 for its smallest screen, has no such subsidies. The result is that iPads may be Apple's second biggest moneymaker at about 15 percent to 20 percent of revenue, but the aren't selling as well as they once did. Apple now faces questions over whether iPad's declining shipments are a temporary hiccup or a troubling trend.
Since introducing the first iPad four years ago, Apple has added at least one new model a year. It started with the 9.7-inch iPad the first year and followed it up with the iPad 2 in 2011. In 2012, Apple released three tablets -- the third-generation "new iPad" in March and the fourth-generation iPad with Retina display (typically called the iPad 4) and 7.9-inch iPad Mini in November.
Apple has also begun offering free software to go along with the device, such as an alternative office productivity suite, and photo, video and audio editing tools.
Now the company is juicing its iPad with a fingerprint sensor and faster chips, following a similar strategy of incremental improvement it applies to laptop and desktop computers.
That's a different approach than with the iPhone, whose screen size and case design were overhauled in September. Sales appear to have jumped as a result, r eaching 10 million during the device's launch weekend, a record for the company.
Whether Apple can repeat that sort of success for the iPad is yet to be seen. The company's share of tablet sales has been falling, dropping to 27 percent in the second quarter, down from 33 percent a year ago, according to market researcher IDC. Competitors, such as Samsung and Lenovo, have meanwhile been gaining ground.
There is still hope for Apple, though. Gartner, another industry watcher, said Wednesday that it expects the tablet market to continue growing, albeit at a slower pace than it earlier predicted. The industry likely will sell 229 million units this year, up only 11 percent. In 2013, tablet sales grew 55 percent.
Apple is also discussed an upgrade for its computer software, dubbed OS X Yosemite, and the launch of its Apple Pay wireless credit card service . A new iMac desktop computer also debuted, with a higher resolution display to squeeze more detail on the screen at once.
