iPad in free fall after sales plunged 22% in Q1

If anyone at Apple has any bright ideas about how to save the iPad, now is the time to speak up.

In the earnings for the first quarter of 2017 announced today, Apple overall reported a strong quarter that would have been even better if it had not been sucker punched by the iPad.

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The company said it sold 13.1 million iPads, down 22 percent from the 16.1 million it sold during the holiday season last year. iPad revenue was $5.5 billion, down 19 percent from $7.1 billion a year ago.

Last year, the iPad was comfortably Apple’s No. 2 product after the iPhone. Now, it’s fourth, behind the iPhone, Macs, and Services — even the “Others” category (Beats, Apple Watch, Apple TV) has almost closed the gap.

The gathering gloom over the iPad deepens further when you consider that three years ago during the holiday period, Apple sold 26 million of them.

What may be most troubling for Apple is this shocking plunge comes after a sustained push that included rolling out a larger iPad Pro and the Pencil (not a stylus!) to broaden its appeal, particularly for business users. Apple has signed several big partnerships with companies like IBM and Cisco Systems. None of this apparently has translated into helping the apple of Steve Jobs’ eye rediscover its momentum.

On a call with analysts and reporters, CFO Luca Maestri insisted that things were not as bad as they seemed. He said Apple sold more iPads in Q1 than it had projected internally. He also pointed to double-digit growth of iPad sales in China and India. And he said Apple has 85 percent market share among tablets that cost more than $200.

“iPad is incredibly successful,” he said.

On the same call, CEO Tim Cook insisted the iPad still had a bright future, and blamed part of the poor showing on a component shortage caused in part by an underestimation of demand. He also repeated his belief that even if unit sales are sluggish, the universe of iPad owners and users continues to grow, a base the company can still leverage for sales of apps and other services.

“I still feel very optimistic about where we can take the product,” he said. “When we look at the number of people buying iPads for the first time … The customer satisfaction for the iPad Pro is 99 percent. It’s stunning. We are still currently in this [supply] shortage issue now. And I’m not projecting to get out of that totally during the quarter. So it will dampen this quarter somewhat. Beyond the 90-day clock, I’m very bullish on iPad. … If I zoom out of the 90-day clock and look at it [more broadly], we’ve got some exciting things coming.”

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