TrendForce: Problems Remain to iPad Upgrade, 2013 Shipment Cut to 70.5 M Units

With the world’s anticipation, the new iPad family members are officially introduced to the market. In addition to the 5^th generation of iPad Air (referred as iPad Air), lighter and smaller as previously expected, the 2^nd generation of iPad mini using the Retina display comes under the spotlight of the tablet market stage. The spec upgrade to the new iPad members is clear and evident, however, in view of the price and product positioning, some problems remain to damp the following sales, says WitsView, the display research division of the global intelligence provider TrendForce. WitsView revises down the iPad sales target for this year to 70.5 million units, from previous 72.1 million units, with a market share of 37% for the entire year.

According to WitsView research director Eric Chiou, the 9.7” tablet iPad Air’s weight is cut to 469g, breaking the record of 495g made by Sony’s 10.1” Xperia Tablet Z and largely improving the long-term mobility issue on large-sized tablets. However, iPad Air follows the iPad family tradition of $499 price tag, which may erode the groundbreaking spec improvement.

The first iPad was released in Q1 2012, and its mobility, internet connection for entertainment purpose, and simple document processing feature were clearly aiming at NBs with comparable functions. Its selling price at $499 was relatively attractive compared to NBs sold for $1,000 and up, which helped start a new era for tablets. The consecutive generations of iPad follow the pricing tradition at $499, supported by the increasingly updated Retina display technology, and become the new cash cow boosting Apple’s revenue as the 10.1” Android tablet army sees difficulties to fight back.  

Until the end of 2011, when Amazon’s first 7” Kindle Fire drove down the tablet price to a desirable range below $200 and shifted the mainstream tablet size to the smaller 7”, iPad saw waning strength on price and weight and the 9.7” sales started to weaken for the first time in 2012.

Chiou indicates the $499 iPad Air still faces many challenges based on the current situation. Firstly, in the throat-cutting competition among branded tablets, the mainstream price ranges for the 7” and the 10.1” have been approaching to $150 and $350 respectively. Compared to them, despite of iOS and the weight advantage, iPad Air’s more-than-$150 price gap may influence many budget-oriented consumers’ purchases. Secondly, the NBs with the touch function see prices dropping, which are expected to strongly occupy the $400-$600 price range and undoubtedly be another threat to iPad Air sales.

WitsView further indicates that compared to the detailed and specific introduction of iPad Air, Apple’s showcase of iPad mini 2 using the Retina display seems foggy and light. In addition to the lack of emphasis on the size, the launch schedule is only mentioned as “later in November”, pointing to the immature and rushed emergence of iPad mini 2 under the double pressures of the market expectation and upcoming holiday shopping season.    

Compared with the 1^st generation of iPad mini, iPad mini 2 has the thickness up from 7.2mm to 7.5mm and the weight surge from 308g to 331g, 4% and 7% increases in thickness and weight, respectively. Nevertheless, iPad loses no lure and remains the most competitiveness-balanced product in the iPad lineup as its $399 price, weight, size, display, and other hardware spec are taken into account.

With a mere $100 price gap, a trade-off effect shows in prices and spec to consumers who choose between iPad mini 2, iPad Air, and the 1^st generation of iPad mini with discount. Furthermore, based on the current mass-production level, iPad mini 2’s ample supply may be delayed to Q1 next year and makes limited contribution to this year’s holiday season sales. Once consumers’ wait-and-see attitude continues in the market, the crowding out effect will be stirred in the iPad family, unfavorable to the following sales performance of iPad.

WitsView gives a thumbs-up to the upgrades of iPad Air and iPad mini 2 and is positive about the attractiveness of the new comers in the iPad family, who is expected to remain pioneer to all tablet PCs in terms of spec. But on concerns of the price positioning, market competition, and product conflict, the iPad shipment target for this year is cut to 70.5M units from the earlier estimate 72.1M. In view of the tablet market, the costly iPad Air and limitedly-supplied iPad mini 2 have difficulties to reignite the iPad market share for this year, which is expected to drop to 37% from 44% in 2012.