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Apple Inc. (NASDAQ:AAPL) iPad Pro Won’t Simply Save the Tablet, Here’s Why

Apple Inc. (NASDAQ:AAPL iPAd Pro

Apple Inc. can’t seem to sell its iPad any more. Merrill Lynch reckons that sales in the June quarter of 2015 fell below 10m units, and they’re not expecting the pressure to let up any time soon. People aren’t buying tablets because they don’t see any reason to stop using their iPad 2 or iPad 3. That’s a huge problem for demand at Apple, and the iPad Pro was supposed to be the firm’s plan to turn the tide.

Apple Inc. (NASDAQ:AAPL iPAd Pro

A report from Forrester turns that idea on its head, however. A recent publication from the research house said that though tablet sales were falling sharply, sales to business are going up. JP Gownder, who covers Infrastructure & Operations Professionals for Forrester, said that the firm’s research projects that 20 percent of the tablet market will be made up of enterprise purchases in 2018.

20 percent growth can’t save Apple

Mr. Gowner, who authored a piece on the research on July 13, says that “enterprise tablets are growing as a percentage of the market, from 6% in 2010 to 20% by 2018.” Most of the rise so far has been from a drop in sales of consumer tablets from a “lack of replacement behavior,” rather than a massive rise in the number of tablets being bought by business.

iPad sales dropped from 16.3m iPad sales in the second quarter of 2013 to 12.6m in the second quarter of 2014. If the 9.9m sales figure from Merrill Lynch turns out to be true, sales will have dropped by 40 percent over just two years. Apple will release its earnings, including iPad sales numbers, on July 21.

If enterprise buying does grow to 20 percent of the total tablet market, that’s simply not going to save Apple’s tablet business. Even if Apple gets every new tablet sale with the iPad Pro, it’s not going to be enough to bring iPad sales back to where they were a couple of years ago.

Apple needs to do more than just ride enterprise market growth, it needs to seed the market, just as it did with the release of the iPad in 2010.

Leveraging the Pro market

Apple may be aiming the iPad Pro less at big business and more at professionals who need special tools in order to do their jobs. The Mac Pro and the MacBook Pro were never supposed to be used by big offices, nor where they meant for everyone. Apple didn’t build the infrastructure to make that possible.

What the firm did was make a tool that addressed a niche market and charged a premium for it. In that sense the firm’s Pro line of devices, with the MacBook Pro the best example, have followed in the footsteps of niche tool makers like Switzerland’s Victorinox and Portland, Oregon-based Leatherman.

The PCs have attracted people that don’t need the niche functionality but desire the build quality and other features that come along with a Pro device. An iPad Pro may not be for the office as most seem to assume, it might simply be a device for the professional market, aping the targets set by the MacBook Pro and Mac Pro.

Forrester cited workers outside of the office as one of the major growth areas for tablets. They can’t use PCs or have trouble doing so, so high quality tablets are a great fit for drivers, and technicians of many different stripes.

There are many market segments that could respond well to a high-powered, big-screened tablet, including designers, architects and photographers. Hitting the Pro market first will give Apple time to grow and make the iPad Pro a better tool for everyone else.

Adding value to the iPad Pro

In order to make the iPad Pro a worthwhile tool for business, Apple  needs to bring features to the device that Google has not done with Android tablets. That’s an uphill battle for a firm with very little background in enterprise.

Apple can’t rely on third party apps like Microsoft Office, because it needs to make the hardware worth a premium price. The firm has a deal with International Business Machines Corp to make apps for business in a variety of fields, but that has yet to come to fruition.

Planet Apple,” as Cantor Fitzgerald’s Brian White calls the firm’s “digital matrix,” is the only thing that can make Apple truly different from other players in the market. The firm is breaking into many services used by consumers including payments, music and even TV.

So far the Apple-IBM deal has yielded results that may be more suited to Apple’s Pro past than any  mass-enterprise outlook would need. Katharyn White, is in charge of the partnership deal at IBM. She says her firm is building apps that will “address an industry pain point.”

22 case-specific apps have already been created for people who work on airlines, those that work in shops, EMTs and many other single roles.

IBM is creating “a suite of apps for a specific role,” according to White, rather than single tools that will work across sectors. That means that Apple will likely aim the iPad Pro at small sales targets to start with. The device simply doesn’t have the “digital matrix” power it would take to make its software work for someone in healthcare and someone in the steel world.

Aiming low with iPad Pro

Digitimes, a dubious source of Apple rumors, said on Monday that Apple was being “rather cautious about placing related orders and the initial shipment volume is much lower than most market watchers’ expectations.” The outlet sourced that rumor to a person familiar with the supply chain.

Apple may be aiming for low sales with the iPad Pro and, given the data from Forrester and the rest on the tablet market, it might be a wise move. Tablet sales aren’t going to spike after one device is released. Even if the iPad Pro is everything the world wants it will take some time for that to sink in.

The iPad Pro isn’t analogous to the iPhone 6. That device entered an incredibly strong market and showed people there was even more they could do with their phone if they shelled out for an upgrade.

The iPad Pro will be positioned like the original iMac, put into the market in order to show there’s value in something people had forgotten about. Low iPad Pro sales should be expected in the first year and, perhaps, for the first few years after release.

Apple  has to create a market before it can really thrive and with iPad sales falling so quickly it’s not building on all that big of a base. The iPad Pro can’t save Apple right away, but it can build a base that the firm will leverage to change the way the tablet is seen across the world.

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