April 28, 2015 Last Updated 8:01 am

Falling iPad sales may concern some, but bigger concern should be falling digital edition sales

Latest Apple earnings show iPad sales continue to fall compared to previous quarters, but Apple will still sell over 50 million units in its fiscal 2015

The latest earnings report from Apple has investors happy, driving up the stock in after hours trading, and again this morning in pre-market trading. But it was interesting to see how many tech and media observers suddenly became concerned about the iPad, as Apple saw sales fall for the tablet for the fifth quarter in a row.

There are a lot of reasons for the decline, the longer upgrade cycle being probably the biggest. But the real question involves whether it is really important to publishers that iPad sales continue to grow. Many publishers think the future is not with the tablet but with mobile, and so falling sales only reinforce that conclusion.

Apple-iPad-sales-Chart-miniIt is important to remember that while iPad sales went from 16.35 million units a year ago in the first three months of 2014, to 12.62 million, that level of sales still leads the industry. It would be a mistake, as many tech reporters did, to equate a fall in sales with an abandonment of the platform. Falling PC sales does not mean consumers won’t buy new PCs, just that they will do so far less often – same may be true of tablets.

Apple CEO Tim Cook, when asked about the iPad, said that he is unconcerned.

“We’re clearly seeing cannibalization from iPhone and on the other side, from the Mac. And of course, as I’ve said before, we’ve never worried about that. It is what it is,” Cook told investors on the conference call. “That will play out, and at some point, it will stabilize. I’m not sure precisely when, but I’m pretty confident that it will.”

Cook mentioned that there remains great potential for sales of the iPad in China, where the market is not saturated with tablets. He also mentioned enterprise sales. But, in general, he didn’t give observers any indication that Apple is looking to make dramatic changes its approach to the iPad – which, unfortunately, probably means that the next iPad will simply be thinner and with the same lack of storage.

“I think still I believe the iPad is an extremely good business over the long term. When precisely it begins to grow again I wouldn’t want to predict, but I strongly believe that it will,” Cook said.

There is good reason to not overreact to the fall in iPad sales: over the past year the iPad has been a $25 billion business. Thought of this way, the iPad is twice as big as Facebook. It is likely that sales for this fiscal year will come in around 55 million units (through Q2, Apple has sold 34 million). In the first year after its launch it sold under 20. Sales are still sold, if not growing.

The real issue facing digital publishers is the direction of tablet edition sales.

For the first year or two after the introduction of the iPad the question most often posed to me was about market penetration of the iPad. Publishers wanted to know if there were simply enough tablets out there to make it worth investing in an app. Some liked to move the goal posts, saying that unless everyone owned a tablet it wouldn’t make sense to invest in tablet editions – ignoring the fact that not everyone subscribes to magazines, not every subscribes to a newspaper (but almost everyone who owns a tablet does, as early surveys seemed to show).

Today, with the Newsstand a mess, and no indication being given that Apple intends to fix it, the focus has changed. If Apple won’t support its own digital newsstand, why should publishers?

More than once I have heard of tablet editions being referred to as “the gold rush” – either because a platform wanted to push the idea that launching a digital publication would be easy money, or as a way to mock those who actually believed the hype surrounding the tablet.

But, believe it or not, the comparison may be appropriate. In the real gold rush, those that made the most money were those that supported the miners, selling them supplies, providing housing and food. Levi Strauss moved to California in 1853 and sold jeans, for instance.

Today, more than one digital publishing platform has been launched to try and get self-publishers to believe they can make money selling digital magazines, while the platforms play a volume game knowing that few self-publishers will sell large numbers of issues, but many publishers selling a few can be profitable for the platform.

Over the past five years a new infrastructure has been created to produce digital publications. Because of this, the digital edition is not going away as both self-publishers and corporate communications people see the value in digital distribution. But it does appear that major print publishers are seeing their digital editions much like Apple sees the iPad: as an increasingly minor part of their overall publishing strategy.

  • Dave 2 years ago

    I’ve been reading your complaints about Apple, and the newsstand mess, for way too long; today’s my day to respond.

    First, I’ll acknowledge that the newsstand is a complete mess. You can’t argue with that truth. It’s mess because of Apple, and it’s a mess because it’s simply a stupid concept! Yes, stupid. For those of us who’ve worked on consumer magazines for years can attest, consumers generally aren’t going out looking to buy a magazine; that goes for most single copies and subscriptions alike As smart markers, we’ve found consumers when they’re open to making a purchase whether that’s at check-out or the mainline, and it’s in their mailbox or working through a catalog call center. We’ve created demand, rather than assuming natural demand. So, the whole idea of people searching is flawed.

    Second, there’s a frustrating flawed assumption that driving digital edition sales is actually a good thing. Let’s set aside gripes about commissions paid to Apple, or Google, as a different cost debate. Yes, you’ll save on all the physical costs of a product to be sure. You also tend to lose a meaningful portion, maybe all of, the advertising value associated with the product. That’s not speculation, it’s the reality publishers face when dealing with big agencies like Starcom, or with critical categories like big pharma. Some titles make sense to shift, but I’m not sure that’s the rule.

    Third, we should focus on the consumer reality as well. Even when they subscribe to digital editions, they don’t regularly engage. As we all know, that’s also a reality when physical copies arrive in your mailbox as well, but there we can quantify that readers only engage perhaps 30% of the time.

    Let’s set the record straight that I was an early enthusiast, brining my title to the app store on day one. We benefited by selling some big sponsorships in the first few months. I also continue to believe that a robust tablet expression is table-stakes.

    What’s this mean? It means we need to stop trying to assume the app store can market for us. It means we need to check our math, and figure out what sort of business tablets should be relative to print. It means we need figure out what sort of tablet offering consumers will pay for, either with money or with meaningful engagement that advertisers will value. It means we need to get over ourselves.

    I know this site is about ‘new media’, but this stuff is now 5 years old. Let’s move on to the really important stuff like making products consumers want, and marketing them effectively.

    • D.B. Hebbard 2 years ago

      Thank you for your thoughtful comment.

      A word about why this site concentrates so much on digital editions: because few others do, and it was the prime motivation for launching the site in 2010.

      You are right, however, that there is far more to digital publishing strategy than digital editions, though you should understand that this site also reaches digital-only publishers who do not engage in any form of print publishing. There are, in other words, two worlds of digital publishers out there – and the two sides rarely meet (TNN one place where they do).