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Squeezed out: as the iPhone gets bigger in size and sales, the iPad keeps slumping

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Apple's tablet sales were down 13 percent compared to the same period in 2013

Apple had a major event last week, and it unveiled new versions of its iPad. Normally the world goes crazy when Apple debuts a device, but the reaction to these iPads was decidedly muted. They were thinner and had more horsepower, sharper screens, better cameras, and Touch ID. But they didn't generate anywhere near the excitement of the iPhone 6 last month, or of previous generations of iPad. All that points to an increasingly clear trend: tablet computers may be here to stay, but they are not going to replace the laptop or PC the way many people once thought they would — at least, not without a drastic shift in philosophy and marketing.

iPad sales are down 13 percent from 2013

In its earnings report today, Apple said that it sold a little over 12.3 million tablets over the last three months, a decline of 13 percent compared to the same period in 2013. That's a sobering reality for the company, whose tablet sales declined 16 percent year over year last quarter. And it compares to an increase of 25 percent for Macs and 12 percent for iPhones. The iPad is now a product category in decline, much like the iPod.

Why is this happening? One big reason is size. Anonymous Apple blogger Sammy the Walrus IV put it very nicely:

Apple now has a much harder sales pitch to make for iPad. Why buy an iPad when you could have an iPhone with a screen that doesn’t seem that much smaller than an iPad mini? Why buy an iPad when you can have a more powerful and just as easily transportable Macbook Air? The space between a phone and PC is smaller now than in 2010 primarily as the phone has become more powerful and larger. Tablets are getting squeezed.

The form factor is key here, not just in terms of the utility for the consumer, but developer support. For all the talk of Apple not suffering from the fragmentation of Android, many well-known iOS apps don't offer an iPad version. As Ben Thompson wrote over at Stratechery:

While I still use Paper on the iPad (primarily for this blog), much of my reading has moved to the iPhone simply because the iPad apps are inferior (TweetBot) or non-existent (Nuzzel)

The new iPads — which aren't yet released — obviously aren't reflected in today's earnings, but it seems unlikely that they will fundamentally alter the headwinds facing the device. Apple still makes profit on every iPad, and there's little doubt that the product category is here to stay — but new questions are brewing about how iPads fit in a world dominated by giant iPhones and small MacBooks that are running a new, thoroughly redesigned version of OS X.