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3 reasons iPad sales are tanking

Apple CEO Tim Cook in front of an iPad
Apple CEO Tim Cook in front of an iPad
Justin Sullivan/Getty Images

Apple released its quarterly financial results today, and as usual the company performed well. From July to September 2014, the company earned $8.5 billion in profits, a billion dollars more than it earned in the same quarter of 2013. The company's sales of iPhones and Macs both saw double-digit growth.

But there was a conspicuous laggard: the iPad. It sold 12.3 million units, 7 percent fewer than Apple sold last quarter and 13 percent fewer than it sold in the summer of 2013. Apple sold 42 million iPads in the first nine months of 2014, down about 12 percent from the 48 million sold in the first nine months of 2013.

Of course, Apple could still have a fantastic holiday quarter — Apple sold a record 26 million iPads during the 2013 holiday quarter. Still, it seems that Apple's years of exponential iPad sales growth have come to an end.

Here are three reasons iPad sales growth is stagnating.

American homes are getting saturated with iPads

iPads are like dishwashers: most households may want at least one, but they don't need to be replaced very often.

Smartphones are different. Most of us buy new smartphones every two years because cell phone companies offer us subsidies that make doing so artificially cheap. Also, we carry our phones around with us everywhere we go, causing wear and tear that doesn't afflict tablets. Plus, rapid progress in wireless technology — from EDGE to 3G to 4G — has encouraged upgrades.

But none of these factors really apply to tablets. That iPad you purchased in 2010 still basically works fine.

Cheap Android tablets are cannibalizing iPad sales in the developing world

There are still plenty of customers in the developing world who don't have a tablet and may want one. But in lower-income countries, Apple must compete with a huge selection of low-cost Android tablets that are attractive to consumers with limited financial resources.

Larger smartphones have cannibalized the market for smaller tablets

A customer who might have bought a 4-inch iPhone and an 8-inch iPad Mini two years ago might find that she can do everything she needs to with a 5.5-inch iPhone 6 Plus.

Of course, selling 12 million iPads is still a hugely profitable enterprise; there's no reason for Apple to panic. But the days when iPads posted double-digit sales growth numbers may be over for good.

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