Apple (AAPL) hit fresh 52-week highs this week, with smartphones accounting for more than half of its sales.
Apple sold 13 percent more iPhones than it did a year earlier, and it had a surprising spike in Mac sales. Macs and Macbooks grew faster than its flagship iPhone business, but it's still just 15 percent of the sales mix at Apple. For now, the iPad is Apple's second-biggest -- but fading -- product line.
Dust Is Gathering on the Shelves
Apple has a problem. It sold 9 percent fewer iPads during the three months ending in June than it did a year earlier. If you think that's bad, that was coming off of a 16 percent decline during the March quarter.
Apple's explanation during its fiscal second quarter -- the one ending in March -- is that retailers had too many unsold iPads during the end of the holiday quarter. This led to a the dramatic slowdown in shipments during the March quarter.
That's a scary admission. However, after back-to-back quarters of year-over-year declines in revenue, we're out of excuses. The iPad is slumping, and it's doing so at a time when tablets in general are more popular than ever.
That's the rub. Apple's iPod business has been fading for a couple of years, and nobody seems concerned. Portable media players in general are declining, largely because folks are using smartphones and tablets as digital media players. However, to see Apple's iPad sales slipping at a time when the tablet is still hot is a major concern.
From iPad to Launch Pad
Two things work against the iPad's popularity: platform and price. The platform is a mixed blessing. Apple's iOS is intuitive, and fans will tell you that it just works. However, as Android gains market share in tablets and smartphones, Apple risks that developers will lean more heavily on putting out Android apps in the future.
It's certainly not a problem now. Developers love iOS because iPad and iPhone owners spend more time on apps and spend more money than owners of cheaper Android devices. That may be fine for now, but it may not be the case if the iPad continues to surrender market share to Android and possibly even Windows devices.
%VIRTUAL-pullquote-The iPad is too expensive. %The bigger problem is price. The iPad is too expensive. Despite introducing cheaper iPads over the years -- you can now get a petite iPad for as little as $299 -- the price to own an entry-level Android device is even cheaper.
Seeing Apple retailers overstocked on iPads after the holidays is bad. Following that up with back-to-back quarters of declines is worse. The only two ways out are for Apple to either lower its prices to the point where the iPad is competitive or raise the bar dramatically in the iconic tablet's next generation to make it irreplaceable by cheaper rivals.
Apple isn't likely to lower its prices, but it would be a smart way to gain more market share for iOS that it can exploit with its iPhone and future devices. Coming up with game-changing features is the way Apple would like to go, but that's not easy to do these days when overseas manufacturers are quick to copy what works.
We can't dismiss the iPad. Apple's rich history of innovation often finds it having the last laugh. However, something needs to change to get iPad sales back on track. If not, the iPad may be the next iPod, and that's not a compliment.
Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple.
9 Brands Made in America for Summertime Fun
Can Apple Restore the Luster of the iPad?
Founded in 2011, Shinola has exemplified the rebound of Detroit. Shinola's employees consist of lifelong locals and craftsmen from as far away as Romania. The manufacturer hold their in high esteem. "Shinola represents America on some level, I believe," President Jacques Panis notes in discussing its bicycles. "It represents the notion that anything is possible."
When you are biking, always remember to be safe by using a helmet. But some children and adults feel they look foolish looking wearing what Bandbox co-founder Dr. Cheryl Allen-Munley calls "a plastic mushroom strapped to my head." Looks aside, the numbers don't lie. According to a 2012 study in the Canadian Medical Association Journal, cyclist triple their chance of death by head injury without a helmet. Thanks to Bandbox, of Lebanon, New Jersey, riders of all ages can look they way they want while staying safe. Bandbox offer covers for its helmets that can make a rider look like a skater, a '20s era flapper or an equestrian.
Waterproof blankets probably aren't the first item you think of when it comes to summer, but they come in handy for trips to the beach, camping and other outdoor events. "Ever since I was young I have always loved the outdoors, sunshine, nature, and mountains," says Jennifer Lock, founder of Zip-n-go in Hayden, Idaho. "... But [I] never loved the grass, dirt, wet ground, and bugs that came along with it."
Some of the best summer memories get created with family and friends around the grill. Little Rock, Arkansas' Paul James couldn't agree more. That's why he resurrected PK Grills, the brand he loved growing up, which had ceased production in the '70s. Avery Allen, a PK employee of almost nine years, speaks on his love for his own durable PK Grill with a deep fondness. "I'm sure if I don't put mine in the will, my kids will fight for it."
Nothing says summer much more than being in the water. Los Angeles, California's Channel Islands Surfboards (CI) Surfboards has been "dedicated to performance and quality through hard work, innovation and originality" since 1969. Head Al Merrick takes pride in the company's transformation from a grassroots operation to cutting edge with the belief that it will shape the industry with innovative designs and attention to quality.
Simms Fishing of Bozeman, Montana, is the last American wader company around. Employing a team of avid anglers, the company strives to give anglers the best day on the water with waders, bags, socks and other items. The company has a deep commitment to fishing. In fact, Simms encourages "Fishing Fridays" for all their employees to take a half-day to go fishing. Not only is it a great way to start the weekend, it has also led to some of Simms' product breakthroughs. "I think manufacturing in America is still very viable," says K.C. Simms, president of Simms. "I love seeing this move to bring more products back to the United States."
7. American Optical eyewear Since 1826, AO Eyewear has been making eyewear in America. Based in Southbridge, Massachusetts, it has quite a few distinctions, but no accolade gets held higher by the company than the "original pilot sunglasses." That's because in 1957, AO and the U.S. Air Force brought out the original pair of spec for pilots, the FG58 aviator sunglasses. Now, can you imagine "Top Gun" without AO's contributions?
Hopefully your summer will consist of at least some kind of getaway. The Lodge in Springtown, Pennsylvania, specializes in accessories, gear and grooming for men, but its travel section could work for anyone wanting to look stylish when going on vacation this summer. The company has only been around since 2013, but it carries an ideology that can resonate with a large section of Americans. As its website says, "We're folks who love America. We like style. And we like the good things in life." No arguments there.
Launched in 2012 by Jim Ford and Cliff Walker in Franklin, Tennessee, Orca Coolers has been selling skilled American-crafted coolers (and several other products) to avid anglers, hunters and other outdoor enthusiasts at competitive prices. Any day out in the sweltering summer sun needs cool drinks and snacks. Even if you aren't an avid outdoorsperson, you can enjoy an Orca at any outdoor event you attend this season. A portion of each purchase goes towards conservation groups, wounded warrior programs, breast cancer research and women's outdoor groups.