Business Research Project Part 2
Business Research Project Part 2
The article (The Guardian, 2015) addresses the issue of the declining sales of iPad tablets in 2014. The sales of iPad were 26.0 million items in the last quarter of 2013, and declined to 21.4 million in the same period of 2014 (17.7% drop). However, this trend is not unique. The other researches indicated that the sales of the other tablets are also constantly declining. However, the analytics consider this is due to increase of the tablet market (more manufacturers on the market). The general trend confirms that all the manufacturers are shipping fewer tablets.
The smartphone upgrade cycle was 12-18 month. This figure for tablets was previously unknown. By 2015, the market situation indicated that the tablet upgrade cycle is longer. Tim cook, Apple CEO, indicated that the table lifecycle is "between an iPhone and a PC". The Guardian (2015) presents the opinion of Gartner research director, Ranjit Atwal, who indicates that "the tablets are shared out among family members". He also stated that the automatic software upgrades keep tablets update. Typically, the tablets are used for simple everyday activities, such as social networks, web surfing, simple games. The majority of consumers stay satisfied with tablet capacities longer than the manufacturers would expect.
The competing items responsible for tablets shipment decline are large-screen smartphones. About 50% of the Android tablets shipments are seven-inch items, and these are under the competing threat of the large-screen smartphones. The same situation is observed for Apple users: the launch of iPhone 6 also caused the tablets sales decrease. The tablets sales are also influenced by laptops and netbooks: the advanced users tend to prefer laptops. There is also theory that assumes that the tablets struggle from lack of innovation, both from software and hardware side.
The article presents several reasons in tablets sales decrease: market saturation, longer upgrade cycle, competing items (large-screened smartphones, laptops and netbooks), and lack of innovation. However, the numerical influence is not presented.
Apple Financial Performance for iPhone and iPads
Tippie (2015) indicates that the commercial success of Apple depends on iPhone product line, which is 50% of its profits. The industry of smartphones, tablets and laptop computers is fast-paced, and Apply might encounter difficulties charging premium prices and receiving high profits. The analysis of geographic diversification of Apple sales indicates that the majority of sales are realized in Americas (40%), the Europe is the second market with 22% sales. However, the Asian markets (except for China and Japan) take only 6% of the sales. Therefore, there is potential for the iPhones and iPad sales in the Asian market. In addition, the European market should be explored in more detail, particularly the Eastern Europe region.
The revenues from iPad and iPhones were 10% and 66%, respectively. The number of the sold iPhones was 231.2 million (2015), and 3.5% growth is expected every year until 2020.
Since 2010, the iPad sales have been increasing every year, and only in 2014 the shipments dropped to 68 million (from 71 million in 2013). The high revenues in iPad segment are also caused by the fact that Apple takes the greatest market share in tablet shipments. However, the situation changes: in 2011 Apple shipped 61.5% of the tablets, and only 24.5% in 2015. This happened due to the increase of the tablet manufacturers. Tippie (2015) anticipates the increased shipments in 2016, and the revenues will increase by 5.9% in 2020.
The segment revenues for iPhone and iPad, performed according to the official Apple data, are presented in Table 1.
Apple Revenues from iPad and iPhone Sales
*of the total revenue
These data indicate that the sales of slow decrease in both in iPhone and iPad revenues. This might be attributed both to decrease in items shipment and small decrease in prices, which appears due to decrease in foreign sales.
Decrease in Semiconductor Sales as a Marker for Smartphones and Tablets Market
Marc Hachman, the senior Editor of PC World in his review (2016) describes the market of smartphones and tablets basing on semiconductor market. He states that the semiconductor sales fell by 2.3% in 2015. The chip manufacturers are concerned about their market, since PC, tablets, and smartphones are the significant share in their production. The popular wearable electronics and Internet of Things do not contribute significantly to the company's revenue. However, the decline in sales, according to Marc Hachman, brings another challenge: "tough times mean discounts" (Hachman, 2016). Hence, the further decrease in sales of electronics will cause the price reductions.
Statistics of Smartphones and Tablets Shipments
The statistics of smartphone and tablet use is presented in Table 2, according to Statista (2016).
Shipments of Tablets and Smartphones Worldwide from 2010 to 2019
Figure 1 illustrate the shipments and forecasts for 2010-2020 for smartphones and tablets.
Figure 1. The smartphone and tablet shipments forecast.
Figure 1 indicates the clear uphill trend for smartphone sales, and the sales by 2020 increase almost 6 times comparing to 2010. The shipments of tablets indicate slow decline, and each year the sales decrease by 7.44 million units.
Figure 2. The smartphone and tablet correlation.
Figure 2 indicates that there is a strong negative correlation between the smartphone and tablet shipments. Namely, the more smartphones are sold, the less tablets are shipped. The correlation coefficient is 0.96; therefore, the smartphone sales influence the tablet sales. This corresponds well with The Guardian (2015) data about the strong influence of large-screened smartphones on tablet sales.
Conclusions
The hypothesis between the year-over-year rising smartphone sales and the declining tablet sales is confirmed by the statistical analysis of the items shipment. The correlation is strong and negative. Therefore, the customers prefer smartphones to tablets, because large-screened smartphones offer the same preferences as the tablets. The smartphones are the gadgets that people have almost every moment of their life. The significant decrease in tablet sales will cause the price reduction. When companies are ready to reduce prices, they are more likely to be ready to come to the new markets, which are unable to pay the current prices. Basing on Apple geographic diversification, the Asian region and Eastern Europe is a prospective new market for iPads. Hence, the company has to develop the new strategy to increase tablets sales.
References
Hachman, M. (2016). Chipmakers Share the Pain as PC, Tablet, and Smartphone Sales Decline. PC World. Retrieved from http://www.pcworld.com/article/3056680/components/chipmakers-share-the-pain-as-pc-tablet-and-smartphone-sales-decline.html.
The Guardian. (2015). "Why are people buying fewer tablets?" The Guardian. Retrieved from https://www.theguardian.com/technology/2015/feb/03/why-are-people-buying-fewer-tablets.
Tippie, H. B. (2015). Consumer Goods – Electronic Equipment. Research Henry Fund. Retrieved from http://tippie.uiowa.edu/henry/reports15/aapl_fa15.pdf.
Statista. (2016) Global smartphone shipments forecast from 2010 to 2019. Statista. Retrieved from http://www.statista.com/statistics/263441/globalsmartphone-shipments-forecast.
Statista. (2016) Forecast units shipments of tablets 2010 to 2019 (in million units). Statista. Retrieved from http://www.statista.com/statistics/269912/worldwide-tablet-shipments-forecast.
