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"The big takeaway from Apple's third-quarter earnings report was that the iPhone is continuing to defy gravity and post stellar sales despite an apparently saturated market for smartphones.\nThe news puts an end to any lingering concerns that Apple's fallow product cycle would depress sales of a product that supplies a commanding chunk of its revenues.\nThe iPad situation wasn't as rosy. \nSee also: The 15 Best Free iPad Games\nApple sold 14.6 million iPads in the quarter, down from 17 million in the year-ago quarter and 19.5 million in the March quarter. The decline came despite the introduction of the iPad Mini last October, which was designed as a hedge against price erosion in the tablet segment. \nWhy are iPad sales suffering? There are three potential reasons \u2014 the growing popularity of smaller tablets, lack of new iPad iterations and a mature market for larger tablets.\nA Move Toward Smaller Tablets\nApple's bread and butter is still its 9.7-inch iPad, but according to the NPD Group, about two-thirds of tablet sales in the first quarter were for smaller tablets. \n\"Overall, the market is switching around,\" said Stephen Baker, VP of industry analysis for NPD. \"Apple is still the dominant player above 8 inches.\" Baker estimates that Apple's share of that market is around 90% in the United States. However, Apple dominates about 30% to 40% of the under-8-inch market. (NPD uses the $400 price point as a proxy for tablet size, meaning it assumes that sales below that market are for smaller tablets.)\nWhile this is an impressive showing for the iPad Mini \u2014 if the price rather than tablet size is motivating the sales shift \u2014 Apple is in a tight spot. The 7.9-inch Mini sells for $329, while a full array of Android-based tablets sell for less than $200. \nExpanding the market in a different direction may be one possibility. Apple is considering a 13-inch iPad, according to one recent report.\nDelayed Product Cycle\nApple's lack of new product introductions \u2014 we haven't seen any so far this year \u2014 is unprecedented in the company's post-2007 incarnation. While many speculated that the dearth of launches would depress iPhone sales, this has not been the case. The iPad may be more susceptible. \nJ. P. Gownder, an analyst with Forrester Research, said the iPad is more of a considered purchase than the iPhone. After all, an iPhone costs less than $200 out of pocket, while an iPad starts at $329. \"Tablets are a bit more like PCs,\" he said. \nSince you don't need a new tablet in the same way you need a new phone, it's easier to wait until the next version of a tablet is released. Gownder said that by now, consumers are sophisticated about reading the tea leaves for Apple's release cycles. \nA Saturated Market\nThe two reasons above may be viewed as a subset of one overriding factor that possibly prompted an iPad sales downturn: a saturated market. Like Gownder, Baker compares the tablet market to the PC segment. Tablet sales are hardly as moribund, but they may head that way as the market continues to mature. A recent Pew report noted that 34% of adults now own a tablet; among households making $75,000-plus per year, the figure swells to 56%. \nSomewhat surprisingly, Pew found the sweet spot for tablet ownership is among consumers in their 30s and 40s. The report doesn't provide a reason, but notes that younger adults tend to own smartphones even if they can't necessarily afford them. The choice between a smartphone and a tablet is apparently no choice at all. Compared to smartphones, tablets are convenient, but not essential. All the more reason to wait until Apple makes its next announcement. \nDespite the gloomy picture, Gownder said that Apple is in good shape and need not worry about flatlining iPad sales. Even with the threat of ever-improving Android tablets, Gownder believes Apple's 8-inch-plus iPad oasis is safe \u2014 for now. \"The more educated buyers understand what Retina display is,\" he said. \nBaker agreed, adding that Apple hit the lower end of the market just right with the Mini. \"I don't think they could have been any earlier,\" he said. \"It wouldn't have made sense.\" \nImage: Sean Gallup/Getty Images"^^<http://www.w3.org/2001/XMLSchema#string>
<http://mashable.com/2013/07/24/ipad-sales-down-q3/>