The iPad slows down

My column this week in Spain’s leading financial daily Expansión is called “iPad freezes” (pdf in Spanish), about Apple’s recent financial results: a company that is increasingly dependent on the iPhone, with exceptionally good sales, but with the iPad apparently on the way down.

The reasons? The competition has got its act together; this is a saturated market for a device the replacement period of which is far slower than the smartphone (despite Apple’s efforts to bring out “new” versions of it) and a stuck in the middle syndrome which makes it a device suited only for content consumption; not as portable as a smartphone, and not as comfortable as a laptop. The company’s share value has been largely saved by the iPhone’s impressive results, coupled with the use of very generous stock splits and share buy backs.

Clearly, the company needs to reinvent a new category.

Below, the full text:

iPad slowdown

Contrary to expectations, Apple’s second-quarter results have generated a substantial increase in the company’s share price.

Any company able sell 44 million smartphones on the market, along with 16 million tablets, and four million computers at significantly higher prices than its competitors demands the respects of the markets; if it is able to look after its shareholders with stock splits and share buybacks, then all the more so.

The only upset in all this is the decline of the iPad. Apple sold more iPhones than it expected: 44 million instead of 38 million. But it only sold 16 million iPads, when it was forecasting 20 million; a significant slowdown.

The reason for the slow down is that people are simply not replacing their tablets as fast as the manufacturers would like; they use them less than their phones, and so don’t buy new ones. It is a product that is neither one thing nor the other: not as portable as a phone, not as comfortable to use as a computer, and not as much fun as a games console. The iPad is basically for consuming content, which means it is used in very specific situations.

Furthermore, the tablet market is crowded, and one where Apple’s competitors have established themselves well. For many users, the Android or Kindle tablets are more than enough.

So, Apple needs to find a new category to reinvent. Perhaps the iWatch’s time has come.

(En español, aquí)