Why Apple Inc. (AAPL) Might Kill the iPad Air

With leaked photos suggesting a Smart Connector, speculation grows AAPL replace the iPad Air with a smaller iPad Pro

As an expected Apple March event draws closer, speculation is now swinging toward Apple Inc. (AAPL) not introducing a new iPad Air 3 beside its next-generation, smaller iPhone. In fact, there is growing suspicion that Apple will actually kill the iPad Air, and instead introduce a smaller version of the iPad Pro.

AAPL to kill iPad Air for smaller iPad Pro

Source: Apple

Apple rumor site 9to5 Mac has been tracking leaks involving the iPad 3, and pieces of the puzzle are falling into place. Signs are now pointing to AAPL releasing a 9.7-inch iPad Pro, such as a Smart Connector and a smaller version of the Smart Keyboard cover being reported.

And Apple isn’t going to have two new 9.7-inch iPad offerings.

That means if there’s a new, smaller iPad Pro, the iPad Air is likely going to be axed.

Why Killing the iPad Air Makes Sense

The truth is, sales in the tablet market are stalling. These days, tablet success stories are found among 2-in-1 tablet devices aimed at professional and enterprise customers. Microsoft Corporation’s (MSFT) Surface line is the prime example of this trend. While AAPL’s earnings report in January showed iPad revenue was down 21%, in its last quarter, Microsoft reported Surface device revenue up 29%.

The iPad Pro — which went on sale in November — is Apple’s answer to the Surface Pro, but the remainder of AAPL’s iPads are aimed squarely at consumers. Convincing that demographic to replace their existing iPad Air is an increasingly tough sell. There are still people using their first-generation iPad!

Instead, souping up what would have been the new iPad Air with the business friendly features of the bigger iPad Pro — including the Smart Keyboard, Apple Pencil support, increased RAM and A9X CPU that makes it a potential laptop replacement — lets AAPL effectively target the professional and business market. That’s a customer base that has plenty of room to grow and doesn’t blink at replacing computer gear every two years — unlike consumers.

A 9.7-inch iPad Pro would still be able to attract those consumers who want to buy a new iPad. This is especially true for the “prosumers” who want a bigger display than the iPad Mini and a device that they could use for light productivity if they wished. By selling the Smart Keyboard separately, AAPL likely would keep the price close to what it would have charged for the iPad Air 3.

It’s worth noting the company used a similar tactic in 2011 when it discontinued the consumer-focused 13-inch MacBook and left the 13-inch MacBook Pro to fill its spot in the line-up. The MacBook Pro was aimed at professionals, but proved just as popular for consumers despite costing $200 more than the discontinued model.

Getting rid of the iPad Air would leave the iPad Mini as the sole consumer-focused iPad. This would allow Apple to eventually simplify the iPad line-up (which currently has five models of varying age, size and capability) while simultaneously shifting its focus toward the professional and corporate market.

The iPad Air Won’t Disappear Tomorrow

Even if Apple does kill the iPad Air in favor of the 9.7-inch iPad Pro, don’t expect to see the iPad Air label disappear from Apple Stores immediately after the March event.

While the original iPad Air — still being produced as a budget mid-sized iPad — is likely to be immediately discontinued, expect Apple to keep producing and selling the iPad Air 2 for now. That keeps the budget-friendly, mid-sized iPad option in place and the iPad Air name remains in play.

If AAPL analyzes the 9.7-inch iPad Pro sales and decides it misjudged the market, it can always come back with an iPad Air 3 in the fall.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/03/ipad-air-pro-aapl/.

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