iPad Air 2: Did Apple Do Enough To Turn Around Dipping Sales? Partners Say Apple Pay Is Key

Apple launched its new iPad Air 2 on Friday, bringing with it a faster processor, better display, Touch ID capabilities and support of Apple Pay, which launched today, all in a thinner frame.

During Apple's second-quarter earnings call in late July, Apple CEO Tim Cook revealed that iPad sales were down 9 percent year-over-year.

IDC said at the time that Apple is still the leader in market share in the second quarter despite sales dropping from 33 percent to 26.9 percent year-over-year. Apple's loss came while the market in general grew by 11 percent, as competitors such as Samsung grew 1.6 percent and Lenovo grew 64.7 percent.

[Related: Harbortouch Gets On The Menu: Will Third-Party Apps Fuel Hunger For Apple Pay?]

IDC blamed the dip in tablet sales, not only for Apple but the overall market in general, on phablets cannibalizing the market of smaller tablet models and "longer than anticipated ownership cycles."

Unlike smartphones, where users often purchase a new one every two years once their contract is up, tablet consumers tend to hold on to their devices a little bit longer.

Cook promised "significant innovation" coming to the iPad during the July earnings call.

If the new iPad Air 2 is the innovation Cook promised, it begs the question of whether or not Apple has delivered on the promised innovation, and is it enough to sway current iPad owners into spending the money on a new one.

Apple partners said that as the iPad is an extremely popular device when it comes to ecommerce, the Touch ID and Apple Pay functionality will be enticing, but might not be enough for people who bought an iPad in the past two years.

"The upgrade cycle for Apple products is every other device," said Michael Oh, CEO of Tech Superpowers, an Apple partner based in Boston. "If you own the iPad Air, going to the iPad Air 2, I'm not sure someone will really want that. Some might have the extra money, but that's not most people. If you have a fourth-generation Retina or older, I think Apple will pull quite a lot of people who had those models. I think demand will be middle-to-strong, but it's not going to blow anyone off the charts. I do think it will surprise some analysts, and will generate more demand than some people think."

Oh said that he had already seen Touch ID making an impact on users prior to Apple Pay even being launched. He said users who own an older iPhone, but have bought an iPhone 6, have grown accustomed to signing onto their new iPhone with Touch ID, making it awkward to sign onto iPads that don't support the fingerprint-scanning feature.

Stephen Monteros, vice president of business development and strategic initiatives at SIGMAnet, an Ontario, Calif.-based solution provider and Apple partner, said Apple hasn't done enough to get someone to replace their old iPads.

Next: 'I Have iPads, And I Wouldn't Upgrade Based Off Of This.'

"I have iPads, and I wouldn’t upgrade based off of this," he said. "Apple was due for a product refresh, so they did a refresh. It's some more hardware, a little thinner, a little prettier."

Monteros wasn't overly swayed by the new iPads themselves, however, he said that Apple Pay, the mobile wallet, being on the iPads makes them attractive.

"Apple Pay is really the big news to me," he said. "I think it could be really interesting because it wasn’t something people were asking for, but I think the software is always what makes the big difference. That is something that really could take off, but it pushes the envelope forward. It just creates a new category. We anticipated new hardware that was thinner, and together it’s a nice package."

"I don’t think people will run to buy it the way they did for the iPhone 6, and won't make everyone upgrade, but people who want that capability of Touch ID and performance will definitely consider it," said Raul De Arriz, national government sales manager for Small Dog Electronics, Waitsfield, Vt., one of the top Apple specialists in the country. "Over time, business is a big market for iPads. I think it'll have a big impact for businesses as developers make new applications with Touch ID, given the security enhancements it brings. The IBM partnership plays really well into that."

In addition to moving into the enterprise market, Apple may be more competitive in the entry-level and mid-level tablet markets.

While announcing the new iPad Air 2 and iPad mini 3 on Thursday, the company said that it will continue to sell the previous generation of iPads at a lower price, with the original iPad mini starting at $249, and the original iPad Air starting at $399.

One analyst said the lower price point will help, in addition to the dominance of the iPhone 6 in the market, as users of the iPhone 6 who own tablets will want to have Touch ID on their tablets as well.

"I think the $249 price point for the iPad mini, generation one, will make it more attractive to buy an iPad," said Patrick Moorhead, president and principal Analyst of Moor Insights & Strategy, a leading tech analyst firm based in Austin, Texas. "People who were thinking about an Android tablet because of the lower price, they will now have the option at $249 to go for the iPad. Touch ID is something you have to experience, but once you get hooked to those features, it's tough to not go with that. I think Apple will pick up U.S. market share in smartphones, and that will help them in the tablet category."

PUBLISHED OCT. 20, 2014