It’s a shame to see a company like Apple Inc. (AAPL), which pioneered modern tablet form factor itself, lose its grip on the area.
Unfortunately, that’s exactly what’s happening right now.
The most recent blow to AAPL’s once-dominant tablet lineup is a recent report from 9to5Mac, which claims the next iteration in the iPad Air product line, the iPad Air 3, won’t feature the popular 3D Touch technology introduced in the iPhone 6s.
Considering 3D Touch was one of the most heavily advertised new features in the most recent iPhone, you’d expect the folks in Cupertino would naturally want it to come standard on the iPad Air 3, which is rumored for the first half of 2016.
Apparently Apple would like 3D Touch to come to the iPad Air 3, but sourcing and production problems are making it impossible. Given that Tim Cook is supposed to be some sort of supply chain savant, this doesn’t exactly bode well for the AAPL stock price, in the short- or long-term.
Innovation Slows to a Crawl
Nevermind that a technology Apple itself hailed as “the next generation of multi-touch” when it debuted won’t come standard on the iPad Air 3 — what’s far more concerning is that Apple has transitioned from the role of legendary innovator to boring replicator.
AAPL stock didn’t become one of the best performers on Wall Street this millennium by boringly replicating, but that’s what it has been doing recently.
Consider the incredibly minuscule differences between the first iPad Air and the iPad Air 2: The dimensions of both were the same, at 9.4 inches by 6.6 inches; the screens had the exact same resolution and had the same storage and video capabilities.
The Apple iPad Air 2, however, was 0.05 inches (1.27 millimeters) thinner, and was lighter by about a tenth of a pound. These were the meaningless differentiators AAPL was most proud of, ones they advertised heavily.
It’s no small wonder, then, that Apple’s iPad revenue fell 23% last year, making it far and away AAPL’s worst-performing product segment. Embarrassingly, Apple is actually ceding market share to Microsoft (MSFT) in the tablet market, and in October, MSFT took 45% of the tablet market to Apple’s 17%.
With tech rival Amazon.com (AMZN) also catching up in the area — its device sales set new records this holiday shopping season — AAPL risks becoming the out-of-touch tabletmaker of yesteryear. What’s the point in paying up for Apple’s premium brand when it hardly changes the specs from year to year, and when Amazon is selling its tablets by the six-pack for $250?
Sure, I understand that the Amazon Fire tablet doesn’t have the app ecosystem Apple does, the screen is smaller and it doesn’t wield the processing power of an iPad Air. But for the casual user, $49.99 for the Amazon Fire is a long way from the $500-and-up AAPL demands for its newer iPad Airs.
Bottom Line for AAPL Stock
If Apple can’t even put one of its coolest recent iPhone innovations, 3D Touch, in the next generation iPad Air, there will be even less reason for consumers to pull the trigger on it as it debuts next year.
It’s time to shake things up, Tim Cook, or risk losing to the likes of AMZN and MSFT.
As of this writing, John Divine was long AMZN and AAPL. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
