(Credit: J.D. Power)
The competition is starting to encroach on Apple’s sacred ground of customer satisfaction.
The iPad maker has routinely emphasized the feel-good aspect of its product lines, against a more strictly econometric view of the world. A case in point:
“We are not solely focused on unit share as I’ve said many times, but we’re focused on usage in customer’s side, the loyalty and other things that are very important to us,” Apple CEO Tim Cook said during the company’s fourth quarter earning call Monday.
So far that focus has worked out well for Apple, but the ground underneath that worldview may have just shifted, if only just a little.
In a J.D. Power Tablet Satisfaction Study released Thursday, archrival Samsung achieved the highest score (835), followed closely by Apple (833). The results mirrored the strengths of the two companies. Samsung, whose Galaxy Tab 3 came out just this summer, had strong marks for the cost of its tablets, and Apple scored well in performance and ease of operation.
Kindle Fire maker Amazon, meanwhile, wasn’t so terribly far behind (826) in J.D. Power’s overall tablet rankings, staying ahead of the study’s average score (821).
Samsung was the only manufacturer to improve across all five factors — performance, ease of use, physical design, tablet features, and cost — since the previous reporting period in April, according to J.D. Power. The survey was fielded between March and August among 3,375 tablet owners who have had their current device for less than a year.
This is not the only slight the iPad line has suffered of late. Apple’s tablet sales have been in decline, with sales flat year over year. In the latest IDC survey, Apple’s iPad share has shrunk from 40.2 percent to 29.6 percent in the last year. Samsung has grown from 12.4 percent to 20.4 percent during the same period. In part, Apple’s share has been impacted by the lack of new products. With the new iPad Air, which goes on sale Friday, and the iPad Mini with Retina Display, expected to arrive later in November, Apple should see some of its share losses erased.
But Cook insists that the most important metric to measure the intrinsic value of Apple’s tablet business is customer usage. He conveniently cites stats from Chitika that the iPad accounts for 81 percent of tablet usage in North America.
In an interview with Bloomberg BusinessWeek, Cook said, “Does a unit of market share matter if it’s not being used? For us, it matters that people use our products. We really want to enrich people’s lives, and you can’t enrich somebody’s life if the product is in the drawer.”
But unit sales do count. So far the company has sold more than 170 million iPads. Despite losing market share, Apple hasn’t lowered the prices, or its healthy gross margins, of its flagship tablet to attract more buyers.
“Interestingly, in an environment where competitors on both the Android and Windows sides of the market are using price cuts as their most powerful marketing tool, Apple actually increased its revenue per iPad unit in the third quarter by $3,” noted Rhoda Alexander of research firm IHS. “Hardware profit plays a big role in Apple’s success, enabling the design, durability and performance innovations that in turn support Apple’s premium pricing.”
The reviews of the new iPad Air support the “premium” that Apple gets, even for an incremental upgrade from the previous version. “Functionally, the iPad Air is nearly identical to last year’s model, offering only faster performance and better video chatting. But factor in design and aesthetics, and the iPad Air is on another planet. It’s the best full-size consumer tablet on the market,” said CNET’s Tim Stevens in his review.
The way Cook sees it, Apple is well positioned to bring new products to market that follow in the tradition of the iPod, iPhone and iPad — premium products that redefine a product category, gain dominant market share and later become a large, profitable niche.
So as the iPad takes a knock or two, the time could be ripe for that iWatch, finally.
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