Jony Ive Is Making People Uneasy

Apple pessimism is on the rise. New Apple products are being questioned like never before. Even some of Apple's most loyal customers are beginning to wonder about Apple's direction. While many are directing criticism towards Tim Cook, nearly all of the criticism pointed towards Apple can in one way or another be traced back to a different person: Jony Ive. 

Apple Power Brokers

The two most powerful people at Apple are Tim Cook and Jony Ive. While Cook is tasked with making sure the Apple machine is being run by the best team possible, Jony's role is much more abstract. Cook aims to foster collaboration at the top of Apple's functional organizational structure. If something goes wrong, much of the criticism is quickly pointed at either Cook or one of his top lieutenants. (Phil Schiller and Eddy Cue seem to take the brunt of the criticism.) Cook has also taken on the more traditional CEO role of representing Apple in the outside world. 

However, the one area Cook does not have complete control over is product strategy. That distinction belongs to Jony. It may seem hyperbolic to consider Jony the most powerful person at Apple. He no longer spends much time managing anyone on a day-to-day basis. He doesn't speak on Apple's earnings conference calls. Wall Street knows very little about him, and neither does Silicon Valley. In fact, following his recent promotion to Chief Design Officer, Jony doesn't even spend as much time at Apple HQ these days. Yet Jony has such a significant influence over Apple's product strategy, it is safe to say we are firmly within the Jony Ive era at Apple. 

Design Led

Jony holds an incredible amount of power because Apple is a design-led company. Apple's functional organizational structure and culture are set up in order to give the Industrial Design (ID) group absolute power. ID holds more power at Apple than any other group. 

This structure was put in place more than 15 years ago with the iMac being the first product to take advantage of this new culture. Up to the late 1990s, engineers held the most power at Apple. Designers were merely tasked with skinning Apple products created by engineers. With the iMac, ID was afforded the freedom to move ideas from conception to reality without compromise. While Steve Jobs was the primary architect of this new power structure, the relationship he had with Jony undoubtedly played a role.

This transition from an engineering-led organization to one based around design was not easy, leading to high turnover throughout Apple's engineering ranks. Jon Rubinstein and Tony Fadell are widely believed to have been pushed out due to Apple's design-led power structure. The primary motivation for Steve Jobs to give ID absolute power was to allow Apple to make big bets and not have them get watered down by compromises that arise from having too many cooks in the kitchen. Jobs saw design as the best way to keep the user experience the most important priority during product development. ID was given the task of overseeing the user experience. 

Doubling Down

Much of the criticism pointed towards Apple today is a by-product of Apple executives doubling down on Apple's design-led philosophy. The logic behind the move is pretty clear: The strategy works. Jony, Richard Howarth, VP of Industrial Design, and the rest of the ID team have more power today than at any other point in Apple history. Jony grabbed additional power during the first major management reshuffle under Tim Cook in 2012. His promotion to Chief Design Officer in 2015 reflected Jony receiving even more control. In fact, Jony has so much control, he now is able to spend more time away from Apple HQ (which I suspect is related to Project Titan). 

ID has complete reign over Apple. This may seem like an overstatement, but take a look at how ID has impacted Apple's overall product direction during the Tim Cook era.

• Apple's move into wearables, health, and fashion? Jony and the ID team. 
• Apple's move into cars and transportation? Jony and the ID team.
• Apple's eventual move into clothing? Jony and the ID team. (Give it a few years.)

This isn't to suggest that Apple isn't empowering other groups within Apple, including those focused on developing services, machine learning and other core technologies. In addition, it would be a disservice to not point out the hardware engineering talent Apple has been accumulating. These groups work closely with ID on turning ideas into products, often creating brand new manufacturing apparatuses from scratch. However, at the end of the day, Apple executives depend on ID to look after the user experience like never before. 

Examples of Criticism

It would be incorrect to position Jony as single-handedly guiding every Apple product from conception to shipped product. Not only would such a statement grossly mischaracterize how much input actually comes from the rest of the ID group, but Jony has traditionally doled out the lead designer role for each product to different people. For example, Howarth was tasked to oversee iPhone design and ended up playing a crucial role in iPad, along with Christopher Stringer. 

Instead of playing a day-to-day role, Jony's influence at Apple reveals itself in terms of the company's overall product direction and narrative. 

There are five examples of how Jony is making people extremely uneasy. 

1) iPhone. There is a growing amount of criticism being thrown at Apple concerning the iPhone's design direction: 

• Apple is looked at as being too focused on device thinness instead of pushing for better battery as if the two attributes share some kind of direct relationship.
• Apple's infrequent hardware refresh cadence has led some to question if Apple is losing its smartphone design edge to Samsung.
• Apple's decision to eliminate the 3.5mm headphone jack from the new iPhones has led many to question if Apple executives have lost their minds. 

For each one of these items, criticism can be traced back to Jony. We are merely seeing Apple continue on the same design path that they were on when the first edition iPhone was launched in 2007. Jony's long-standing goal is to have the iPhone's screen take precedence above all else. This means that ID will likely have the iPhone evolve into nothing more than a display with as few physical distractions or unnecessary additions as possible. Most ports, buttons, and excess bezel will be removed. The design changes rumored to be included in the 2016 and 2017 iPhone models certainly seem to fit ID's long-term goal for iPhone. 

2) Mac. The sheer panic that the lack of Mac updates has caused some people is nothing more than ID shuffling resources and priority. Instead of updating older Mac models merely for the sake of updating, something that isn't that difficult to do, Apple continues to push the boundary with the Mac by mostly focusing on design and the user experience. We saw this firsthand in March 2015 with the new MacBook. All signs point to the second phase being announced soon with an updated MacBook Pro. To complete the Mac line, the iMac will eventually see a redesign in order to give the product an even firmer position in an increasingly mobile world where smaller screens are grabbing all of the attention. Overall, the Mac still has a role to play, but I suspect its priority is continuing to fade in the eyes of ID. This is classic resource allocation at Apple as devices capable of making technology more personal take priority.

MacRumors Buying Guide for Mac

Source: MacRumors

3) Apple Watch. Apple's entry into the wearables space and corresponding deeper relationship with fashion and luxury themes originate with Jony. While a growing number of Apple users are poking fun at the amount of attention Apple has been giving to Watch bands over the past year, the bands go a long way in explaining how Apple managed to sell 15M Apple Watches to date. More importantly, the broader Apple Watch category highlights Jony's quest for using design to make technology more personal. Apple is clearly positioning Apple Watch as the evolutionary outcome for iPhone, something that the vast majority of the population do not yet see as a possibility. 

4) Accessories. New Apple accessories including the Apple Pencil, Magic Mouse 2, and iPhone Smart Battery Case have been ridiculed by many in the tech press. Some people are wondering if Apple has given ID too much power as no one wanted to say "no" to these accessories and their seemingly awkward charging experiences. All of those accessories can in one way or another be traced back to Jony. The Apple Pencil has many trademarks of Jony, including how the top cap is designed to be played with in hand. The Magic Mouse 2 charging position makes plenty of sense when compared to the older battery-powered Magic Mouse. (A one-minute charge gives a half a day's worth of usage.) Listen to Above Avalon Podcast Episode 45, "People Love Accessories," for a more detailed discussion on Apple's accessories.  

Island of "Misfit" Apple Accesories

Source: YouTube

5) Project Titan. While consensus is still coping with the idea that Apple is designing its own car and it took more than a year for some to wrap their mind around the idea, there is still an elevated sense that Apple must be very desperate to want to move into the auto industry. In reality, the Project Titan startup is a design-led initiative. This goes against prevailing wisdom in the tech industry that says the future of the car will be determined by autonomous driving. I disagree. Instead, design will be the factor that allows us to redefine the car. Jony and Marc Newson are likely the two most powerful people currently working in the car industry given their interest and expertise in industrial design, which includes working with new materials and manufacturing techniques. One of the key aspects of Project Titan will be coming up with new ways to manufacture car parts, a key strength of both Jony and Newson. 

Jony's Apple

One aspect of Apple that is rarely discussed is how the company has seen most of its success in a relatively short amount of time. In the span of just seven years, Apple unveiled three brand-new categories (iPhone, iPad, Apple Watch) that cumulatively bring in $150 billion of revenue per year.

Not enough time has passed for us to get proper historical perspective on how some of the decisions being made by Cook will end up impacting Apple. On paper, things look fine and all indications suggest Apple's product pipeline is healthy. However, it will take years to properly analyze the decisions Cook is making today.

However, when it comes to product strategy, I suspect that in a few years, when we look back at this current stretch, we will refer to it as the Jony Ive era at Apple. 

• Existing products like iPhone and iPad are seeing evolutionary design changes that fit with Apple's long-standing design language put forth by Jony. 
• Apple is embracing luxury in an entirely new way, all the way down to how it designs its brick- and-mortar locations and headquarters.
• Apple is running quickly into automobiles and transportation, which has the potential to shape the direction of the company for the coming decades.

All of these changes are making people uneasy. Some think Apple's design-led culture doesn't fit within today's changing tech landscape. Others think Apple is running out of ideas. Instead, the opposite is true. By doubling down on design, Apple is placing a rather large bet. Apple executives think design will continue to allow Apple to remain focused on the customer experience. It is this customer experience focus that will then keep Apple relevant and able to ride the technology waves like no one has done before. It all comes back to Jony and the ID philosophy that is guiding Apple. If you have doubts about Apple, you probably are uncomfortable with Jony's vision for the company.

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The Art of Simplicity

Apple Watch and Apple Music shared something in common with each other in the beginning. They lacked simplicity. In an effort to give each product the best chance of success, Apple focused too much on telling a compelling story and not enough on letting the product tell its own story. This lack of simplicity explains how Apple Watch and Apple Music were called both resounding successes and utter failures during their first year. 

Early Criticism

At each step along the way, Apple Watch and Apple Music had their critics. Many claimed the initial Apple Watch keynote lacked direction, others thought the Watch didn't seem to do enough, and some claimed that the Watch's interface was too confusing. 

After just a few weeks on the market, it would have been an understatement to say that Apple Watch had become a polarizing product. While some people loved it, others thought it lacked the finish and attention to detail found in other Apple products. As Wall Street slashed Apple Watch sales expectations, what was once deemed the next big thing after iPhone quickly turned into nothing more than a footnote on Apple's quarterly earnings calls.

The Apple Music unveiling wasn't too different from the unveiling of Apple Watch. The introduction during the WWDC 2015 keynote was not good. In the following months, the press turned against the service with some referring to Apple Music as "cluttered," "awful," and even "broken." Reports of a confusing user interface and a list of random problems plagued Apple Music for most of its first year. 

Given how expectations turned sour for both Apple Watch and Apple Music soon after launch, one would have assumed each would end up being massive flops in the market. However, the opposite occurred. 

Successes

During the first 15 months on the market, Apple sold 14.5 million Apple Watches at an average selling price of $435 each. In addition, Apple sold at least five million extra Watch bands as Watch wearers embraced the idea of owning multiple bands. The Apple Watch is already a $10 billion business. It's difficult to describe this as anything other than a success. 

Apple Watch has become not just the best selling smartwatch, but one of the single-best selling devices worn on the wrist in history. In addition, there is growing evidence that Apple Watch has already begun to impact the Swiss Watch industry (evidence here, here, and here). It may be a distant memory now, but the wrist watch had been deemed mortally wounded by the smartphone as recently as a year ago. The percentage of people going around without a watch on their wrist was hitting multi-generational highs. The Apple Watch changed everything. 

Meanwhile, Apple Music garnered 15 million paying subscribers in its first year, a pace six times faster than that of Spotify. Even though music can be consumed for free at Spotify, YouTube, and Pandora, Apple was able to get 15 million people to pay as much as $120 per year to lease music. This is nearly twice the average amount spent per user per year in iTunes. More impressively, Apple Music's 15 million subscribers represents about 15% of all paid music streaming users in the world. 

Lack of Simplicity

How can Apple Watch and Apple Music appeal to millions of people yet be considered flops or failures by others? While high expectations and never-ending comparisons to iPhone success may have contributed to this unique dynamic, neither reason gets to the heart of the issue. 

Apple Watch and Apple Music lacked simplicity. This produced a situation in which the product's key attributes and value propositions resonated with some customers while others saw nothing more than unfinished products.

Simplicity allows a product to communicate with users. The result is a clear understanding of that product's perceived functionality and purpose. One way of accomplishing this is to develop a product in such a way as to allow that product's design to tell a story. Design isn't just about a product's physical attributes. It also involves how the product works. Apple has had success in the past when it comes to selling simplicity. 

• iPod simplicity. The iPod was designed for one task: listening to 1,000 songs in your pocket. Everything about the device was geared toward making it easy to accomplish that one task. It would be incorrect to say that the device's functionality was limited due to its simplicity. Instead, the iPod became one of the most loved ways to consume music thanks to its click wheel and accompanying user interface.  
• iPhone simplicity. The iPhone was designed to play music, surf the web, and make phone calls. As with the iPod, simplicity didn't lead the iPhone to be a comprised device with a lack of features. Instead, the iPhone became the most versatile, personal computer in history thanks to the new multi-touch user interface. 

The problem facing Apple Watch and Apple Music wasn't that their launch presentations weren't good enough or that they relied on ineffective marketing campaigns. Those items weren't able to explain the response these products received in the marketplace. Instead, Apple tried too hard during product development to tell a story in order to give each product a strong sales pitch at launch. 

With Apple Watch, Apple pushed the idea that third party apps would transform the device into a versatile gadget with lots of use cases. The thinking was that this would have the Watch appeal to a wide range of consumers. The app revolution had led to much success for iPhone and iPad, so Apple figured this would rub off on Apple Watch. The Watch's user interface was built around the idea of using apps on the Watch as if it was an iPhone or iPad. A honeycomb pattern of app icons was given nearly as much prominence as Watch faces. 

In essence, Apple tried too hard selling the Watch as a mini iPhone on the wrist with which users rely on lots of apps to get through their day. Much more problematic was that Apple never explained how apps would help Apple Watch tell its story. This dynamic made it difficult for consumers to understand the Watch's purpose. Was the Watch supposed to be used like an iPhone or was it some kind of fitness tracker with apps? 

With Apple Music, Apple's problem was more straightforward. Instead of launching Apple Music as an easy to use streaming service that placed an emphasis on music discovery through human curated playlists, Apple tried to make Apple Music a one-stop shop appealing to everyone. It suffered from a lack of purpose. One example of this was the Connect feature with which Apple Music users could follow their favorite music artists. As apps on the Watch may have made sense on paper, something like Connect seemed to initially make sense for Apple Music. However, adding an entirely new social layer within an already crowded app just didn't do much to convey Apple Music's fundamental purpose of making it easy to listen to music.

Solutions

One way to validate the claim that Apple Watch and Apple Music lacked simplicity is to look at this year's WWDC keynote (my full analysis from WWDC is available here and here). WatchOS 3 and the new Apple Music highlight that Apple was aware of a lack of simplicity and had been working for months on removing friction points.  

Apple Watch. After using the Watch for just a few days back in April 2015, it became clear that the device wasn't a regular watch. It was also obvious that it wasn't a mini iPhone. Instead, the Apple Watch was something different. A watch case containing a rectangular face, digital crown meant for scrolling, and sensors used to record data suggests the device had been designed to be a monitoring device. Users could monitor their health/fitness activity, incoming notifications, and other types of information including calendar items, directions, and mobile payments. The changes found in watchOS 3 are meant to allow Apple Watch to better tell its story as a monitoring device. 

Apple is now de-emphasizing apps in the new user interface, instead focusing on complications and Watch faces. Instead of selecting apps from dozens of small icons arranged in a honeycomb pattern, with watchOS 3, we primarily consume information through complications on Watch faces. This is why Apple made it much easier to switch Watch faces in watchOS 3. Even the Watch's side button functionality was altered to make it easier to consume information.

Apple Music. In the revamped Apple Music app announced at WWDC, Apple went back to the basics with the focus being on adding simplicity to the app. Refined tabs, including a more accessible music library as well as rethought "For You" and "Browse" tabs, make it easier to access the most important items. In addition, the Connect tab was removed and instead the functionality associated with Connect was positioned as more of a background item to the app. While there are still some questions as to font sizes and other design elements, it's difficult to argue that Apple didn't make it easier to discover new music daily. 

Simplicity Is an Art

The primary takeaway from Apple Watch and Apple Music lacking simplicity is that simplicity is an art. Simplicity could only be added to Apple Watch if the product had a design capable of telling a story in the first place. If the product is truly flawed, trying to add simplicity in later revisions or versions will lead to disappointment. Similarly, with Apple Music, Apple can only add simplicity to the service if Apple truly believes in using human curation to allow users to discover new music. 

It is easy to say that Apple should have done this or that differently with Apple Watch during the first year. Could Apple have highlighted different use cases? Would skipping third-party apps have led to much of a sales difference? These questions are irrelevant if the underlying product is not capable of conveying purpose in the first place. 

Looking ahead, when it is time for Apple to introduce new products and services, management will likely look at Apple Watch and Apple Music and remember that a product's value is derived much more from the story told through design than by the narrative created with a certain feature set. Without good design, simplicity is unattainable. 

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The iPad's Dark Days Are Over

After a tumultuous multi-year stretch that included massive unit sales declines, declining average selling prices (ASPs), and deteriorating margin trends, the iPad business has turned a corner. The combination of improving upgrade fundamentals, less severe iPad mini sales declines, and a stronger iPad lineup with the iPad Pro and accompanying accessories have positioned the iPad category that much closer to stabilization. The worst is likely over.  

The iPad's Early Potential

The iPad shot out of the gate like a rocket in 2010, instantly becoming the best-selling new Apple product in history. Considering that the iPad was an entirely new category positioned between an iPhone and MacBook, many were caught off guard by how consumers embraced the new form factor. As seen in Exhibit 1, initial iPad sales were nearly three times as strong as initial iPhone sales. Consensus even began to think the iPad would end up outselling the iPhone over time. Needless to say, iPad optimism was riding high. In just 10 quarters on the market, Apple sold 100 million iPads. It took Apple 16 quarters to hit the same milestone with iPhone.

Exhibit 1: iPad and iPhone Unit Sales Post Launch

The Turning Point and Dark Days

In November 2012, just two and a half years after launching the original iPad, Apple unveiled the lower-cost 7.9-inch iPad mini. The goal was simple: Prevent Android competitors from gaining traction under the iPad's price umbrella. Apple did not want to see a repeat of the 1990s all over again. This time it would be in the tablet space where Android would become the new Windows. 

While the iPad mini was well received with many in the press calling it the "real" iPad, the device ended up representing a turning point for the iPad business. After what appeared to be a very successful 1Q13 holiday season for the iPad thanks to the mini, Apple reported its first decline in iPad unit sales just two quarters later. Since then, the iPad business has experienced a brutal three-year stretch. 

The iPad's dark days had arrived. Heading into 2015, the iPad line consisting of iPad mini and iPad Air looked dated and out of place within Apple's evolving product line. This led many to conclude that the tablet may simply be a less attractive product category going forward in a world dominated by large-screen smartphones. In addition, iPad marketing just didn't seem to contain much of a punch. Many of the iPad use cases profiled could be handled just as well, if not better, with an iPhone. Unsurprisingly, iPad expectations turned remarkably low.

In 2013, Apple sold 71M iPads. Apple's 3Q16 marked the 10th consecutive quarter of iPad sales declines. Apple is now on track to report 46M iPad unit sales in FY16. As shown in Exhibit 2, this significant 35% drop in sales, spread out over number of years, has given the iPad a very ominous sales trajectory. 

Exhibit 2: iPad and iPhone Unit Sales Trajectories Post Launch

iPad Problems

There have been a number of factors put forth to explain the iPad's troubles. I suspect much of the iPad's difficult stretch over the past three years has been due to two overarching reasons:

1) Peak iPad Mini. As shown in Exhibit 3, the iPad mini form factor has experienced a more significant sales decline than its larger 9.7-inch sibling. According to my estimates, the iPad mini is responsible for approximately 70% of the iPad's overall sales decline since 2013.

The iPad mini form factor bore all of the competitive headwinds associated with larger screen smartphones, much more so than its 9.7-inch screen iPad sibling. I suspect the iPad mini initially benefited from interest in and curiosity for an iOS device that was bigger than the 3.5-inch and 4-inch iPhones at the time but smaller than the 9.7-inch iPad 2 and 3. Meanwhile, the iPad mini's low price and feature set positioned basic video consumption as a leading use case. This distinction meant that the iPad mini upgrade cycle was basically a myth. When an iPad is used for nothing more than video watching, there is little to no incentive to upgrade. 

Exhibit 3: 7.9-Inch iPad vs. 9.7-Inch iPad Unit Sales (TTM)

2) Longer Upgrade Cycle for 9.7-inch iPad. If 70% of the iPad's decline is due to the iPad mini, the remaining 30% relates to 9.7-inch iPad owners holding on to their iPads for more than two or three years. The iPad upgrade cycle is more like four to five years. The iPad 2, released in 2011, still represents 15% of iPads in use today. This elongated upgrade cycle meant that the 9.7-inch iPad would not follow in the steps of the iPhone, a device that saw sales benefit from a very short two-year upgrade cycle for years. Apple continued to do fine selling iPads to new customers. However, the lack of iPad upgraders meant it was that much harder for Apple to report year-over-year iPad sales growth. 

Signs of Improvement

Just as it seems like people have completely written off the iPad business for good, signs are beginning to appear that point to improving iPad fundamentals. In fact, I suspect the iPad's dark days are already over.  

Better Upgrade Fundamentals. The average age of iPads in use now exceeds three and a half years, as shown in Exhibit 4. This is one of the best developments for the iPad business in years. At the current rate, the iPad business is close to hitting its natural upgrade cycle cadence, likely in mid-2017 to early 2018. I estimate there are approximately 225 million iPad users out in the wild. Assuming the average iPad upgrade cycle extends out to five years, this means that Apple would have approximately 45M iPad unit sales per year just due to existing iPad owners upgrading their devices. Meanwhile, Apple is on track to report annual iPad sales of 45M units for 2016. This number includes both iPad upgraders and customers new to iPad. This suggests that Apple's iPad business is very close to approaching a natural sales run rate at which the combination of upgrades and sales to new users will lead to roughly flat sales growth year-over-year. 

Exhibit 4: Average Age of iPads in Use

One announcement from WWDC provided much credibility to the theory that the iPad upgrade cycle will top out around five years. iOS 10 will not be compatible with the original iPad, iPad 2, iPad 3, and iPad mini, iPad models that are six, five, four, and four years old, respectively. This means there will be approximately 65M iPads that will not get the latest iOS release. That is a very significant number of iPads. While it's wrong to conclude owners of those iPad models will rush out and buy a new iPad as a result of not getting iOS 10, it does provide a few clues as to how Apple is thinking about an iPad's useful life before turning into an inferior experience: between four and five years. 

Less Severe iPad Mini Headwinds. With the iPad mini contributing to 70% of the iPad's overall sales decline in recent years, there is evidence that the period of massive iPad mini sales declines is coming to an end. Given current iPad mini sales, there is simply less room for the device to register the same kind of sale declines seen in the past. Accordingly, overall iPad sales will benefit from no longer having a massive iPad mini sales headwind. For example, in 3Q16, the iPad mini likely represented less than 20% of total quarterly iPad sales. While I remain confident that we have seen Peak iPad Mini, I do not expect iPad mini sales to go to zero. The device represents one of the low-cost entry-level devices for the iOS ecosystem, which will appeal to millions of consumers each year. 

Stronger iPad Lineup. The 9.7-inch and 12.9-inch iPad Pro and accompanying Apple Pencil and Smart Keyboard accessories represent the iPad's future. One consequence of iPhones becoming larger and MacBooks becoming smaller was that the old iPad line felt stale and out of place. Apple needed to shift its iPad strategy to the high-end, as detailed in my article, "Finding iPad's Future," from August 2015. This would be the opposite of the iPad strategy kicked off with the iPad mini at the end of 2012. Not only do the Pros serve as the first genuine iPads worth upgrading to for existing 9.7-inch iPad users, but they also give Apple a much better story to tell in terms of marketing. Apple's latest iPad commercial demonstrates this as Apple is explaining the iPad in a whole new way. The iPad is no longer the product that exists between a smartphone and laptop. Instead, the iPad is a computer. 

iPad Sales Stabilization Is Near

As a very early sign that all of these positive developments are coming together, Apple just reported the best quarter for iPad unit sales growth in 10 quarters, highlighted in Exhibit 5. The 9.7-inch iPad Pro launch certainly played its role. While sales are still declining, on a revenue basis, the iPad business registered its first year-over-year increase in 10 quarters. This is the clearest sign in years that iPad is approaching stabilization.

Exhibit 5: iPad Unit Sales Growth

Even though iPad sales declines will likely continue for a few more quarters, the probability that the iPad business will see significant sales declines from current levels has been reduced. Meanwhile, ASP and margin trends look to have long-term tailwinds as well. Looking ahead, the 40M sales milestone is the leading candidate for a natural sales run rate for the iPad business. This means that iPad sales would have to fall another 10% before reaching that level. To put that decline in perspective, Mac sales have declined more than 10% for the past two quarters. While the days of strong 30-40% unit sales growth will likely never make a return with iPad, it's clear that the iPad will soon enter a new stabilization phase. The dark days for the iPad are over. 

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