Have Apple's iPads Peaked?

Apple's Next Chapter: 10 Key Issues

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Late Apple CEO Steve Jobs famously said, "If you don't cannibalize yourself, someone else will." That sentiment effectively sums up the company's attitude toward its new iPhones. With larger screens, the new devices have already established a blistering, record-setting pace during pre-sales.

But these gains could be offset by lower iPad numbers. After all, the iPhone 6 Plus is basically an iPad Mini mini, as some online commentators have called it, and it's hard to imagine Apple's foray into phablets won't deflate demand for at least its smaller tablet.

It's also hard to say how troubling Apple execs find this scenario. In the short term, CEO Tim Cook is probably happy to trade iPad Mini sales for those of new iPhones. If carrier subsidies are removed from the equation, Apple's smartphones are actually more expensive than its tablets. This indicates that each time someone decides to buy an iPhone 6 or 6 Plus instead of an iPad Mini, Apple earns more money.

[Will another gadget make you a better person? See Apple Watch: A Cure For Smartphone Addiction.]

But here's the "problem," such as it is: iPhones already drive a disproportionately huge amount of the company's revenue, and the company's revamped product lineup only increases this dependency. That's not necessarily a problem as long as iPhones remain the most popular single brand of smartphones -- but no empire lasts forever. Apple's critics have speculated for the last year that the company's iPhone reliance could be a long-term vulnerability, reasoning that if a competing phone significantly leapfrogs the iPhone in quality, Apple could suffer the kind of quick downfall that it imposed on Nokia and BlackBerry.

These might be excessively alarmist concerns. Few large tech companies have been as consistently and stupidly underestimated as Apple. During the recession, the company defied odds with explosive growth -- but that didn't stop analysts from declaring every few days that Apple's momentum wasn't sustainable. Six years later, Apple's still the most valuable brand in the world, still produces the most popular and lucrative family of mobile products, and still exerts more cultural sway than any of its peers. The company also typically brings in more revenue than Google and Microsoft combined.

Will the iPhone 6 Plus eat into iPad Mini sales?

Then again, iPad sales have begun to cool off. The tablets are Apple's second-largest source of revenue, and it's not clear if or how quickly the Apple Watch will achieve comparable mainstream success. Apple's tablets burst out of the gate even faster than iPhones did, so after such rapid growth, this slowdown might have been inevitable -- but it also reinforces that Apple might be too reliant on a single product. Cook has dismissed slower iPad sales as a short-term trend and promised that Apple can still take its tablets in new and interesting directions. Perhaps that's true. But Apple faces tougher conditions than ever before.

For one thing, tablet owners haven't upgraded their devices as often as smartphone users do. Two-year carrier contracts that encourage new phone sales contribute to this dynamic, as does the fact that smartphones, because we always carry them, are simply more intimate and relied-upon than other consumer electronics. Apple's most popular iPhone is the relatively modern iPhone 5, for example, with the 5s not far behind, and the 6 and 6 Plus poised to be even bigger. But its most widely used tablet is the aging iPad 2.

PC sales are also modestly bouncing back, following several years of speculation that tablets had killed off demand for conventional computers. Tablets are here to stay, but so is mouse-and-keyboard productivity. Most of us can't afford to upgrade PCs and tablets every couple years, so while we snap up new smartphones as soon as we can, we let larger-screened devices grow longer in tooth.

Apple also faces increased pressure from its tablet competitors. Android's market share is frankly overrated, given how much of it derives

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