Both iPhone and iPad sales were down approximately 19 percent moving from Apple's second quarter to its third, but the difference was that iPhone transactions were up roughly 13 percent, year-to-year, and iPad movement was still down 9 percent, according to Apple's third-quarter report.
The iPhone's periodic dips can be attributed to the two-year contracts wireless carriers offer to subsidize the true price of the smartphone, while the upcoming iPhone 6 can account for the handset's latest sales dip. But the iPad's steady descent may point to a weakness that will be a rising concern for Apple.
While losing a little steam, the tablet market has still been growing -- it expanded by 11 percent, year-over-year, in the second quarter of 2014, according to a report from the International Data Corporation. But while the tablet market grew, Apple's share fell by 9.3 percent when comparing the second quarter of 2014 with the same period in 2013.
"iPad sales met our expectations, but we realized they didn't meet many of yours," said Apple CEO Tim Cook to investors. "Our sales were gated in part by a reduction in channel inventory and in part by market softness in certain parts of the world."
There are three primary reasons the iPad has struggled, according to Gene Munster, of Piper Jaffray. The first reason was that lower-end tablets were pushing the growth of the tablet market, while Munster said the second and third reasons were that Apple had tapped its share of the market and iPads haven't been subsided like many other mobile devices.
"Second, we believe the low-hanging fruit in the high-end tablet market has been captured with Apple selling 225 million iPads over the first four years," stated Munster. "Tim Cook commented on the earnings call that the adoption of the iPad over the first four years has been better than they were expecting, perhaps suggesting the high end is becoming saturated. Lastly, given iPads are not subsidized, the replacement cycles tend to be longer compared to an iPhone."
Jean Philippe Bouchard, IDC Research director for tablets, attributed the fall of iPads and other top players in the tablet market to the "rise of large-screen smartphones." Similar to Munster's assertion that the iPad has collected all of the low-hanging fruit, Bouchard said that Apple and other tablet manufacturers would have to climb farther up the tree to harvest from the enterprise sector.
Apple's new partnership with IBM could help the tablet gain solid footing in the enterprise world, Munster indicated.
"I just think we have to do some more things to get the business side of it moving in a faster trajectory," said Cook. "I think we're now onto something that can really do that."
