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Researchers Confused About the Tablet Market & Why Apple May be Delaying Foldable iPhone
April 08, 2019

The tablet business seems to have reached a point where analysts can’t figure out if customers want these devices or not. Users are being told that tablet demand will decline as users choose to buy laptops, Chromebooks, and foldable smartphones. Apple may have a stranglehold on tablet operating systems, but it doesn’t do much good to own a market that is falling apart.
 
There is just one problem… the market may not be falling apart after all. As quickly as you can find a study that says tablet sales will decline, another study suggests tablets will return to growth. According to Frost & Sullivan, the tablet market will grow at a compound annual growth rate of 1.6% through the year 2024. Though this doesn’t sound like fast growth, by 2024, it would mean 187m units worldwide. This second study suggests tablets will gain new capabilities and cannibalize laptop sales. Assuming that iOS continues to hold its 74% worldwide market share, by 2024, the company would sell about 138m of these devices. Apple sold roughly 43 million tablets in 2018.  

Figure 1: Projected Tablet Sales

Source: Statista tablet market *projections
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In the last four quarters, the average revenue per iPad has hovered around $430. At 138 million devices, this would generate about $15 billion in quarterly revenue. Last quarter, Apple generated $6.7 billion from the sale of iPads. More than doubling its iPad revenue in the next five years, is something investors would be more than happy to accept. Perhaps, the iPad revenue and potential growth is the reason Apple is equivocating on the introduction of a foldable iPhone, which would not likely impact sales but could be a 1:1 reduction in iPad shipments. The introduction of the newest iPad Air and the revised iPad Mini is a confusing choice on multiple fronts. First, the iPad Mini hasn’t seen a refresh since 2015. Second, the iPad Air hasn’t been a name used since 2014. It’s almost like Apple forgot it sold these devices in the first place.
 
Table 1: Apple’s iPad Specs

Source: Apple iPad Air and iPad Mini pages
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If these devices were standalone products, the company’s results would likely be amazing. The problem is Apple now gives users a lower-priced choice, that may cut into the average selling price that just started to recover.
 
Table 2: Apple’s iPad ASP

Source: Apple
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​(Source: AAPL quarterly earnings - *ARPU for Q1 is derived from Apple selling 13.1 to 13.2 million iPads in the first quarter the last two years. Taking the $6.7 billion in iPad sales and dividing by 13.1 or 13.2 million yields the range of $507.57 to $511.45)