It Starts with Diminishing iPad Sales

by Colin Berkshire

The Apple iPad is a product with steadily declining sales numbers. This seems to mystify industry analysts and Apple alike. Tim Cook reportedly has said: “It is what it is.”

I regard Tim Cook as a bureaucrat. He is politically savvy, he gets along with others, and he administers the company with a “steady as she goes” attitude. That is: he isn’t going anywhere very fast. He can capture pre-existing momentum, but doesn’t have the vision to take Apple to the next level.

I don’t think Tim Cook understands Apple’s success. He seems to view Apple as a high end boutique brand where fashion and styling command premium prices. He hired the CEO from Burberry to be the head of retail, so I don’t think I am far off here.

Apple has experienced its greatest successes when it technically crushed the competition and aggressively priced their products. Yes, Apple under Steve Jobs was aggressive in pricing.

When the iPod came out it had a price that was below most name brand competitors. And, it was a smaller, faster, better product, when iTunes launched they sold music for 99¢ a song which was a killer-good deal and they had the largest song collection. When the MacBook Air came out no other company could make such a small computer. While the MacBook Air was expensive, the fact was that no other company could touch or beat it.

So it went for the iPad. When it came out, analysts thought it would sell for $999 when launched. It started at half that, at $499. For years, no other company could make an iPad-like device for a lower price or as thin and light. It was an untouchable deal.

Today when you look at the iPhone, comparable products from competitors sell for about the same price. If you really compare Apples and Samsung on a feature equivalent basis, they are about the same price. Apple wins because of their technology ecosystem.

When you look at the iPad it is overpriced. Competitors have units that are equivalent and that cost less. The iPad hasn’t pushed forward on offering better value like other surviving Apple products. It remains a pricey tablet. It’s just not that competitive against other tablets. And, this is why it’s sales are sinking.

My concern is less about how the Apple iPad is missing the market. I think it is the tip of the iceberg about how Apple is missing the market. Apple is not Burberry. Apple survives by offering superb value. This is done through great pricing and superb differentiating technology.

If your company isn’t offering superb value, you are playing a losing game. Just remember that value is not just price. It is what you get for your money. (And, the primary value of what you get had better not be prestige.)