The Diminished iPad

Something very strange is happening this week: there is an Apple event, and very few people – including myself – are particularly jazzed up about it. Oh sure, I’ll watch it, and I hope I’m surprised, but there is very little in the rumor mill – a retina iMac, OS X Yosemite, and the iPad Air 2 – that is particularly noteworthy. If anything, it is that lack of noteworthiness that is the most noteworthy thing of all.

Earlier this week, one of my absolute favorite Twitter followees – SammyWalrusIV – posted a brilliant piece about the iPad:

The iPad is at a crossroads. Introduced by Steve Jobs four years ago, the iPad has gone on to become a phenomenal success (225 million units sold bringing in $112 billion of revenue and approximately $30 billion of profit), but I suspect Apple management will alter the iPad line-up in response to wearable devices and larger-screen phones and in the process iPad’s ultimate trajectory will be more modest and niche than many expect.

This is certainly a big comedown from the sky-high expectations that followed the iPad’s explosive growth in 2010 and especially in 2011, when many conjectured that the iPad business would ultimately be bigger than the iPhone. The question, though, is if the decline in the iPad’s fortunes is simply the natural order of things, Apple cannibalizing itself before others have the chance, or a missed opportunity.

I think that it’s all three.

The Disappearing Middle

At the first iPad presentation, Steve Jobs was at pains to explain that the iPad would only work as a product if it found a spot between the iPhone and Mac where it did some number of things much better than either.

Jobs iPad Placement Slide

There’s no question, at least in my mind, that the iPad delivered. From day one it was a great reading and video device especially, and games – particularly the complex Euro-style board games that I like – were a revelation. New apps soon arrived, too; I particularly remember how blown away I was by Flipboard. The iPad, though, truly came into its own with the iPad 2; it was significantly lighter, making it a lot easier to hold, and much faster. And by that time the App Store was in full swing, with compelling new apps being released constantly, all on top of an interface that was far more approachable and usable for simple everyday tasks. In addition, the iPad had seemingly impossibly long battery life, making it well worth the carry anytime you were away from the house for an extended period of time.

Over time, though, that middle has shrunk. Macs have gotten much smaller and, more importantly, achieved much better battery life, removing one of the iPad’s biggest advantages. Suddenly convenience pushed in the direction of carrying only one device. And, while the iPad may have been simple, its limitations meant that if there were only one device, it would usually be the more powerful but complex Mac.1

Apple’s Self-Cannibalization

And now the iPhone is making a major play for the original iPad standbys: reading and video. One can absolutely argue that the iPhone Plus is superior to the iPad or iPad mini for reading; it’s lighter, thinner, yet plenty big enough to get lost in a good book or essay (for me, the iPhone 6 is enough; then again, I used to read RSS feeds over WAP). The battery life is just as good, if not better; more importantly, it’s always with you: on the bus, in line, and on the couch. Reaching three feet for an iPad may not seem like much, but the additional friction of physical movement, finding your app, waiting to sync, etc. just doesn’t seem worth it anymore. As Sammy put it:

Why buy an iPad when you could have an iPhone with a screen that doesn’t seem that much smaller than an iPad mini? Why buy an iPad when you can have a more powerful and just as easily transportable Macbook Air? The space between a phone and PC is smaller now than in 2010 primarily as the phone has become more powerful and larger. Tablets are getting squeezed.

Obvious though larger iPhones may have seemed to many of us, Apple still deserves praise for pushing ahead with the iPhone Plus in particular. Anyone who thinks this won’t have an impact on iPad sales is surely kidding themselves. And make no mistake: that’s bad for Apple in the short term. Sure, the iPhone Plus has much better margins – both in percentage and absolute terms – than the iPad mini especially, but one iPhone Plus per customer is still much less money for Apple than that same customer buying both an iPhone and an iPad.2 Apple though, just as they did with the iPod and Mac previously, has proved itself willing to cannibalize itself.

To be sure, Apple is certainly not too worried: the downside of a bigger phone is reduced convenience and portability, opening up room for a device that is even more portable and always with you – the Apple Watch. And, just as the iPhone was much more profitable than the iPod it replaced, the Watch will almost certainly be much more profitable than an iPad.

The iPad’s Missed Opportunity

However, I think that Apple has missed a significant opportunity to make the iPad into an essential fourth device (in addition to the iPhone, Mac and eventual Watch). Sammy gets at the problem:

I can’t remember the last time I downloaded an iPad app. Curious to see how others were doing, I posed a question on Twitter, “How many iPad apps have you downloaded in the past month?” On any given question I get a decent number of responses, but this time I received a very muted reaction with a few “0” responses. Why am I not downloading iPad apps? I consider iPad app innovation to have slowed with iPhone continuing to take a disproportionately high amount of attention in the app ecosystem. Most of my daily mobile usage now occurs on an iPhone.

This echoes my own personal experience. While I still use Paper on the iPad (primarily for this blog), much of my reading has moved to the iPhone simply because the iPad apps are inferior (TweetBot) or non-existent (Nuzzel).3 More broadly, there simply aren’t that many apps like Paper that make an iPad essential. I personally will always own an iPad simply because Paper on the iPad does something for me that no other Apple device does; this simply isn’t the case for nearly enough people.

This is Apple’s fault.

While I wrote a few months ago that too many developers blame Apple for their own business mistakes, the fact remains that Apple has incentivized developers to build shallow apps with customer-unfriendly business models. Specifically, by not enabling trials, which would allow truly superior apps to charge more for paid downloads,4 and most damagingly, not providing built-in paid upgrades, which would incentivize developers to build and iterate complex apps with the confidence they could capture additional revenue from their existing customers over time,5 Apple has made it a fool’s errand to build something like the aforementioned Paper.

I wrote about Paper specifically in a series last year about Apple’s App Store failures:

  • Papering Over App-Store Problems link
  • Casual Gaming is a Sustainable Business but not a Platform Differentiator link
  • Why Doesn’t Apple Enable Sustainable Businesses on the App Store? link

In that final piece, I chalked up Apple’s refusal to allow developers to build sustainable businesses to their 1997 paranoia:

The trouble for Apple – or any platform provider – is apps that cross that line from nice-to-have to completely irreplaceable. It’s at that point a user’s loyalty shifts from platform to app, and there are no greater examples than the aforementioned Photoshop and Microsoft Office [which Jobs had to beg to continue supporting the Mac, most famously at the 1997 Boston Macworld Expo]…

But there have been downsides to this paranoia. Apple’s inefficient use of its cash is the most famous, but I think developer hostility is an aftereffect as well. I would go so far as to argue that that Boston keynote was at the root of Jobs’ opposition to any 3rd-party apps on the iPhone, much less app store policies that enable sustainable businesses. Never again would Apple be held hostage to an app that was bigger than Apple.

The problem is that must-have apps are exactly what the iPad needs to become indispensable. And sadly, while Apple seemed to shrug off much of that 1997 paranoia at this year’s WWDC, they didn’t make any real changes to the App Store policies around trials and upgrades that would truly make a difference. Truth be told, though, this year’s WWDC was likely already too late. By then iPad sales had already started to decline on an annual basis, giving developers even less incentive to focus on the iPad.

The iPad Going Forward

To be clear, I’m by no means declaring the iPad doomed. It remains far more accessible for many people than a Mac will ever be, and rumors about split-screen apps and larger sizes suggest that Apple sees its role as slowly but surely replacing the Mac over time, particularly for the younger and older generations. It remains a killer device for video, although that’s a job that is fulfilled just as well by cheap Android tablets. There are also niches that are thriving on the iPad, particularly in music, and here the iPad is highly differentiated from Android. In addition, Apple is clearly positioning the iPad as a tool for the enterprise; Tim Cook’s default answer for questions about the iPad has been to point to Apple’s partnership with IBM.

Still, I can’t help but reminisce about what might have been had Apple harnessed the incredible developer enthusiasm for the iPad in 2010-2012. More than any other iOS device the iPad needed help to make it indispensable to everyone, but Apple famously doesn’t like depending on anyone. And now no one cares.

  1. I’m using Mac as a stand-in for all PCs; the point holds regardless []
  2. I keep hearing people say that Apple is actually coming out ahead not only because an iPhone Plus is more expensive than an iPad but also because people will update the iPhone Plus more frequently; that’s true, but ignores the fact that said customers were already buying iPhones regularly. Two devices is worth more than one, no matter which way you cut it []
  3. It should be noted that TweetBot’s lack of updates are likely due to Twitter’s token restrictions, while a Nuzzel app is coming. The more important point, though, is about Paper and similar iPad-only apps []
  4. There is no way for customers to know with confidence that a paid app is worth the money; trials would separate the wheat from the chaff []
  5. It’s not an apples-to-apples comparison, but Aldus PageMaker, the application that made the Macintosh a success, charged around $500 for an upgrade every couple of years []