Device Fatigue: Is the rise of Larger Smartphones stifling iPad growth?
42 millions of iPads have been sold worldwide in 2014 so far, but the number of iPad users in the U.S. have remained relatively flat, growing only a humble 5 percent between January and April this year. What does this mean for Apple?
Usage is a better indicator of success than sales.
iPad sales have been slowing for a year, as indicated by Benedict Evans newsletter (1). Furthermore, IDC forecasts a 12% growth rate for tablet sales vs. 23% growth in smartphones. Smartphones, at 1.2 billion units in sales have a user base that is six times larger than the tablet base.
Could it be that just four years after launch, tablets have reached the point of saturation? Even if Apple is forecasted to sell 13M iPads in Q3 – of which a fourth will be sold in the U.S (2) .
From January 2014 to April 2014, iPad users in U.S. increased by two million (5 percent growth), while for the same period, smartphones users increased by 11 million, demonstrating a far greater leadership in the space and stronger user base, almost four times higher than the iPad.
Last month Tim Cook stated, “more than 50% of iPad buyers are first-time tablet owners.” Assuming this statement is valid for the U.S., why is the number of users not increasing?
If we look at usage, total time spent on the iPad by U.S. users has increased by only 3 percent between January to April 2014. If U.S. was a market of “first time buyers”, the total time spend would have automatically increased significantly, too.
Looking at usage, it seems that either the iPad market is becoming a renewal market in the U.S. or the massive flow of new users does not compensate the number of customers that stopped using the iPad. This would be an even more concerning scenario.
However, usage analysis illustrates a more subtle trend. People are forgoing the browser, in favor of applications.
The application ecosystem is dominating the iPad world
Almost 100 percent of iPad owners use an app at least once a month. On the other hand, use of the browser is dwindling. With 20 million monthly unique visitors (MUV) in the U.S., browser users represent only half of the iPad users. Interestingly, the number of browser users on the iPad has declined to the level it was in August 2013.
A detailed look at time spent on iPads sends a strong confirmation that the application ecosystem is dominating. Assuming Comscore figures are accurate, iPad users spend 3.7 more time on applications than on browsers. While the time spent on applications has increased by 27 percent since November 2013, time spent browsing was stable at just a two percent growth, demonstrating the switch in terms of way to access content.
After iPad, Apple has to continue to innovate to win the next battles.
With almost 40M monthly unique visitors, Apple has built an amazing consumer audience in the U.S. market. However, the slow down of the iPad’s installed base and the flat user numbers is a real concern, pointing to a quick saturation of the overall market. Was the iPad a flash in the pan for early adopters? What’s interesting is how people are using iPads in new, unexpected ways, pushing browsers out of the game almost completely and preferring to access apps. In the global battle over who owns the customer, Apple scores high, but will need to continue to innovate hard to win the next battle of the app ecosystem.
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(2) Industry estimates