Apple Inc. (AAPL) has been in the news a lot lately because of strong numbers lately and a flashy new line of products.
Apple earnings showed strong sales and profits, as well as improved guidance. That was driven in large party by iPhone sales, which account for more than half of the sales the tech giant records each quarter, and clearly the biggest driver of AAPL stock. The recent Apple iPhone 6 launch helped fuel big sales in the latest quarter.
Of course, after the iPhone event came a smaller debut for a new line of Apple iPads — and sadly, the flagship tablet continues to disappoint both gadget geeks and AAPL stock investors alike.
Apple CEO Tim Cook just unveiled a new iPad Air and iPad Mini at a big event recently with the goal of propping up sales and forcing older iPad users into the upgrade cycle. But that’s a tall order, considering that the segment continues to record fewer and fewer unit sales even as other items like iPhones and Macs and App Store purchases are growing at a brisk rate.
But AAPL stock investors asking about the future of the Apple iPad should ask themselves a different question: Does Apple even need the tablet?
AAPL Stock Has Options Without a Tablet
First, consider the growth of the iPhone screen size. The original Apple smartphone in 2007 had a 3.5-inch screen, and now the iPhone 6 is 4.7 inches while the iPhone 6 Plus is a whopping 5.5 inches from corner to corner.
That’s a large enough screen for many consumers, and could actually be a shot in the foot if you’re worried about Apple tablet sales; the iPad Mini is just 7.9 inches in screen size and some may opt for the new iPhone instead of an Apple iPad Mini tablet.
So if you’re worried about great, portable mobile technology, doesn’t Apple’s new line of larger phones cover a lot of that ground?
In regards to the mythical enterprise segment or more traditional computer uses, admittedly an iPhone may be troublesome. However, if you’re serious about a full computing experience but want a reasonably portable options … what’s wrong with a MacBook?
AAPL stock posted strong earnings in part because of a record 5.52 million Macs sold last quarter, thanks largely to MacBook Air and MacBook Pro. That’s up a phenomenal 21% year-over-year, proving that the post-PC age doesn’t necessarily mean the end for MacBooks.
This, after Mac sales soared by double-digits in the previous quarter, too.
Certain professionals, including web designers and graphic artists, have long considered Macs superior to PCs running Windows from Microsoft Corporation (MSFT). And as consumers find the minimal computing power of their smartphones good enough for email, social media and web surfing … it makes sense that the market has shifted towards practical use and word-related applications, and that those folks have gravitated towards the light, portable and powerful MacBook line.
There are assuredly reasons to own a tablet in addition to (or in place of) a laptop or smartphone. But AAPL stock holders should really ask themselves what kind of consumer the company would be missing out on if it just focused on great smartphones in a variety of sizes and elite MacBooks that cater to those who want a little more computer and a little less gadget.
If the Apple iPad did become a niche product, secondary to both iPhones and MacBooks, AAPL stock may still enjoy big success going forward.
Jeff Reeves is the editor of InvestorPlace.com and the author of The Frugal Investor’s Guide to Finding Great Stocks. As of this writing, he did not hold a position in any of the aforementioned securities. Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP.
