iPad Pro predicted to push tablet sales back up to 15% of Apple's total revenue

Posted:
in AAPL Investors edited November 2015
While the iPad lineup has continued to shrink to a smaller portion of Apple's total business, this week's launch of the iPad Pro could reverse that trend, one analyst believes, predicting total iPad sales will account for 15 percent of the company's revenue in 2016.




FBR & Co. analyst Daniel Ives believes the iPad Pro will find success in the enterprise market, helping reignite sales for the product lineup. The iPad currently accounts for about 10 percent of Apple's total revenue.

iPad sales have been on the decline for the last year, but Apple, as well as Ives, see potential for growth in enterprise sales. Earlier iPad efforts have been largely focused on consumers, who rapidly adopted the device for years, but sales have since cooled off.

Apple hopes to change that when sales of the iPad Pro begin on Wednesday, before the device makes its way into the hands of consumers later this week. The device boasts a 12.9-inch display with 5.6 million pixels, along with a new A9X processor that Apple says rivals most portable PCs.

Declining iPad sales have been attributed to a number of factors, including a longer upgrade cycle for the device than Apple's iPhone. This is supported by a recent study that found that the iPad 2 remains the most-used model.




In addition, the iPad is also believed to have been affected by the introduction of larger 4.7- and 5.5-inch iPhone screen sizes. Apple has also seen Mac sales continue to grow to new record levels.

Apple Chief Executive Tim Cook called out investors last month for not talking about the iPad. To him, the device continues to play an important role in Apple's ecosystem, particularly in emerging markets, where many buyers choose the iPad as their first-ever Apple product.

For example, in China, 40 percent of those who purchased an iPad had never owned any Apple products before. In addition, for 68 percent of iPad buyers in China, the iPad was their first tablet.

As for the rest of Apple's product lineup beyond the iPad, Ives believes the iPhone will exceed Wall Street's current estimates for fiscal year 2016. He also expects the company will launch a streaming television service in the first half of 2016, and he sees the Chinese market growing to a $100 billion opportunity for Apple's iPhone sales.

FBR has maintained its "outperform" rating on shares of AAPL with a price target of $175.
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Comments

  • Reply 1 of 39
    $175? In his dreams! We all know AAPL is stuck in the sub-$130 zone.
  • Reply 2 of 39

    15% sounds way too optimistic, unless Apple, Adobe, and Microsoft produce new apps that can immediately replace their desktop counterparts.

     

    If Apple is going to head in this direction and expect their users to drop their laptops for a tablet with a makeshift cover/stand, an inferior keyboard, and top dollar, Apple must have some crazy new products up their sleeves that we haven't seen yet. Otherwise, and it pains me to say this, Surface Book would be a better choice despite Windows 10 and the awkward gap.

  • Reply 3 of 39
    15% sounds way too optimistic, unless Apple, Adobe, and Microsoft produce new apps that can immediately replace their desktop counterparts.

    If Apple is going to head in this direction and expect their users to drop their laptops for a tablet with a makeshift cover/stand, an inferior keyboard, and top dollar, Apple must have some crazy new products up their sleeves that we haven't seen yet. Otherwise, and it pains me to say this, Surface Book would be a better choice despite Windows 10 and the awkward gap.

    No way I'd subject myself full time to Windows 10. I had to deal with an issue on a Surface tablet for 20 minutes and even that was too long.
  • Reply 4 of 39
    calicali Posts: 3,495member
    I've said it before, the iPad is too similar to iPhone and because of lower sales Apple has treated iPad as a less important device.
    iPad Pro is the most different iPad yet and has been given premium features, so that should help.
    Still too similar in my opinion.
    I'm seriously looking forward to an iPad POS-system rollout someday.
  • Reply 5 of 39
    Quote:

    Originally Posted by SpamSandwich View Post





    No way I'd subject myself full time to Windows 10. I had to deal with an issue on a Surface tablet for 20 minutes and even that was too long.

    My experience with Windows 8 and 10 on a desktop has been decent. I've had to deal with Windows 8 on a Surface Pro for a few hours and it was quite the painful experience. It's a tablet! No -- it's a laptop! No -- it's some hybrid and it does neither task well.

  • Reply 6 of 39
    mr omr o Posts: 1,043member
    Quote:

    Originally Posted by AppleInsider View Post



    While the iPad lineup has continued to shrink to a smaller portion of Apple's total business, this week's launch of the iPad Pro could reverse that trend, one analyst believes, predicting total iPad sales will account for 15 percent of the company's revenue in 2016.

     


     

    Yes, this will be the case once the full iPad line-up is compatible with the ? pencil and 3D touch.

  • Reply 7 of 39
    croprcropr Posts: 758member

    The 15% figure is nothing but speculation. 

    The main question will be how well can an iPad Pro replace a laptop in the business environment.  If it is, Apple will see a lot of new iPad customers and a 15% might be reachable by end 2017.  If not, the iPad Pro will be a  replacement for the current iPad 2 owners and the sales figures decline will not be overturned.

    Apple is betting that the screen size, the keyboard and the pencil will be convincing arguments, but I have my doubts.  The recent iPad sales decline is not hardware related.  The main reason why a iPad cannot fully replace a laptop,  is called iOS and its limitations. Too many simple tasks are painfully difficult on an iPad:  sending an email with 2 locally stored attachments is such an example.

  • Reply 8 of 39
    maxitmaxit Posts: 196member

    I still think the iPad Pro is a niche product.

    It will sell, for sure, but I don't see it as a product able to change the tablet's market trend.

  • Reply 9 of 39
    Ludicrous that the stock is down $3 pre-market. Perhaps over a bogus-sounding CS report. Unbelievable....

    But I am expecting that it'll be back up to share it started, before the end of the day.
  • Reply 10 of 39
    rogifanrogifan Posts: 10,669member
    Quote:

    Originally Posted by anantksundaram View Post



    Ludicrous that the stock is down $3 pre-market. Perhaps over a bogus-sounding CS report. Unbelievable....



    But I am expecting that it'll be back up to share it started, before the end of the day.

    Wall Street it's totally spooked by anything to do with iPhone. I wouldn't be surprised if the stock is down 4% or 5% by the end of the day.

  • Reply 11 of 39
    Analysts are getting in the habit of downgrading Apple the day before a new product is released to the public. Why the SEC has yet to put these stock manipulator so in prison is itself a crime.
  • Reply 12 of 39
    cali wrote: »
    I've said it before, the iPad is too similar to iPhone

    iPads are too similar to iPhones in the same way bathtubs are too similar to swimming pools.
  • Reply 13 of 39
    Quote:

    Originally Posted by cali View Post



    I've said it before, the iPad is too similar to iPhone and because of lower sales Apple has treated iPad as a less important device.

    iPad Pro is the most different iPad yet and has been given premium features, so that should help.

    Still too similar in my opinion.

    I'm seriously looking forward to an iPad POS-system rollout someday.

    There are a few iPad POS systems out there. 

     

    I've seen them mostly in restaurants. I think some might be better than others. Because whenever I see one I try to ask the person if they like it, the responses are very mixed. Some people really like it and some really don't. Some are indifferent and I've seen that a couple of people didn't even know it's an iPad.

     

    Unless you meant an iPad POS system where everything is made by Apple. In which case I fear you might be waiting for a while.

  • Reply 14 of 39
    rogifanrogifan Posts: 10,669member
    sog35 wrote: »
    Nope.

    Its up to Apple and Apple shrareholders to act.  If you go to a store and they slap your face every time you go there will you keep shopping there?  Who's fault is it if you keep shopping there?  Its your fault.

    Apple keeps getting slapped by Wall Street yet they keep trying to appease Wall Street.  Its Apple's fault. They need to LEAVE Wall Street and go private. 

    Apple has a new product coming out this week and we've seen ZERO positive PR. We get Eddy Cue saying he uses his to read email and surf the web. We have Tim Cook in Italy talking about climate change and gay rights. Apple should be on a full court press right now making everyone want an iPad Pro. Eddy Cue saying it's great for email and surfing the web isn't a ringing endorsement of this product. And it just reinforces the stupid notion that you can't do "real work" on an iPad. I sometimes wonder who is running Apple's public relations and if they really know what they're doing.
  • Reply 15 of 39
    appexappex Posts: 687member

    To really boost sales, just bring a Mac tablet.

  • Reply 16 of 39
    pmzpmz Posts: 3,433member
    Quote:

    Originally Posted by AppeX View Post

     

    To really boost sales, just bring a Mac tablet.




    That's exactly what this is. If the Apps themselves aren't good enough, that's developers fault. All the hardware is there.

  • Reply 17 of 39
    pmzpmz Posts: 3,433member
    Quote:

    Originally Posted by cali View Post



    I've said it before, the iPad is too similar to iPhone and because of lower sales Apple has treated iPad as a less important device.

    iPad Pro is the most different iPad yet and has been given premium features, so that should help.

    Still too similar in my opinion.

    I'm seriously looking forward to an iPad POS-system rollout someday.



    On the contrary, iPad is as successful as it is because of how similar it is to iPhone, not the other way around. Inbetweeny tablets that don't identify themselves or their purpose fail. 

  • Reply 18 of 39
    asciiascii Posts: 5,518member
    Quote:
    Originally Posted by AppleInsider View Post

     



    FBR & Co. analyst Daniel Ives believes the iPad Pro will find success in the enterprise market, helping reignite sales for the product lineup. The iPad currently accounts for about 10 percent of Apple's total revenue.

     

    The picture of the guy hunched over an iPad drawing a technical diagram is a bit non-typical, in most businesses people sit at cubicles with a terminal. But if you showed a picture of someone at their desk with a tablet propped up and a foldaway keyboard in front of it it would look suboptimal, and would visually demonstrate why the iPad taking the business world by storm is unlikely.

  • Reply 19 of 39
    brucemcbrucemc Posts: 1,385member

    Going from 10% to 15% of Apple's revenue in one year seems like a huge leap.  Not sure this is based on anything more than this analyst wanting to get some headlines.

     

    Hopefully the Pro does move the iPad line into new use case areas, which is what is needed to grow the overall business in a sustaining way.  While many jobs today require a "PC" as we know it (office jobs where we sit & type for variety of reasons, number crunching in large data sets), there are many jobs where a PC was used as it was the only tool, but not necessarily the best one.  As the nature of business changes, it is possible the iPad becomes more useful in yet other jobs that today are dominated by PC.

     

    The modern tablet category is only a little over 5 years old...too early to say it hasn't yet transformed market...the PC didn't revolutionize productivity overnight either.

     

    I do agree with Ben Thompson though that Apple needs to focus more on their "app policies" to enable better apps to be developed.  Right now, the incentives are not there for developers to create comprehensive, more valuable apps, as they do with the PC.

    - Trial periods before purchasing

    - Ability to monetize upgrades

    - Developer ability to get feedback via App Store from users on product improvements, addressing issues, etc.

  • Reply 20 of 39
    rogifanrogifan Posts: 10,669member
    Here's a headline I just saw on Google News:

    IPAD PRO IS FOR THOSE WHO CONSUME CONTENT RATHER THAN CREATE IT, SAYS APPLE VP

    And the Verge just put up an editorial claiming that Apple hasn't learned from Microsoft and iPad Pro can't replace a PC. We know this is the narrative out there, what is Apple doing to counter it?
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