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Apple Looks to Juice Declining iPad Sales With IBM and Biz Apps

Stocks in this article: AAPL GOOG MSFT IBM

NEW YORK (TheStreet) -- Amid slowing iPad sales, Apple (AAPL) will be looking to reinvigorate growth from its second-biggest product line, with the next iPad helping further the thesis that tablets will really overtake the PC.

In Apple's fiscal third-quarter, the company shipped just 13.2 million iPads, generating $5.89 billion in revenue. Both revenue and units shipped fell sharply, with revenue falling 23% sequentially and 8% year over year, and shipments falling 19% sequentially, and off 9% year over year. That marks the second quarter in a row of sharply lower iPad revenue and shipments, something CEO Timothy D. Cook pointed out on the earnings call.

On the call, Cook noted, "Our sales were gated in part by a reduction in channel inventory and in part by market softness in certain parts of the world. For example, IDC’s latest estimate indicates a 5% overall decline in the U.S. tablet market, as well as a decline in the Western European tablet market in the June quarter."

Read More: Here's What We Think We Know About the Next iPhone

With iPad sales having slowed for a second straight quarter, to the point where the decline had to be addressed, Apple announced a deal with IBM (IBM), to help bring both the iPhone and iPad more prevalently into the enterprise. "I think they [Apple] need to discover and promote more enterprise-focused iPad applications so that is what the IBM partnership is all about," said Ironfire Capital co-founder Eric Jackson, an Apple shareholder, in an email. "It will take quarters to build it up."

On the earnings call, Cook stated that Apple's partnership with IBM, which will bring more than 100 industry-specific enterprise solutions including native apps, developed exclusively from the ground up, for iPhone and iPad, as well as IBM's cloud services and data analytics expertise, "will be one such catalyst for future iPad growth."

The concern about the tablet market has been that larger smartphones, particularly those known as "phablets," can do everything a tablet can, as well as make calls, providing little reason for consumers to keep purchasing them in droves.

Research firm IDC recently lowered its projections for the tablet market this year, as it now expects 245.4 million tablets (including 2-in-1 devices such as the Microsoft (MSFT) Surface Pro) for 2014, down from a prior view of 260.9 million units, up just 12.1% year over year, citing the rise of tablets.

Following the successful branding of the iPad Air, Apple is expected to keep the iPad Air name, as it gets set to refresh the tablet line (Apple currently sells four iPad models), perhaps as soon as this fall. Here's what consumers and investors alike can expect to see from Apple, as it looks to build on the initial success of the iPad, and reinvigorate iPad revenue growth for shareholders.

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