In one chart, here's why the iPad business is cratering

Just about everything is going well for Apple right now.

The iPhone business is booming for Apple, Mac sales are strong, and people are getting excited about the Apple Watch. The stock is up. Apple is getting a new, glowing story in the press on a weekly basis.

There’s only one thing that’s not so hot for Apple, and nobody really talks about it — the iPad. iPad sales have been contracting every quarter, and nobody seems to know why. Since iPhone sales are on fire, it doesn’t matter. But, the iPad was supposed to be the next major leg of the stool for Apple. There was even talk it could be bigger than the iPhone eventually. Nobody says that anymore.

So, what’s going on? Credit Suisse analyst Kulbinder Garcha has a pretty straightforward theory: The large smartphones (phablets) are killing the iPad. Why buy a tablet when you could have a big smartphone, which is pretty much the same thing as a tablet?

Here’s a chart from Garcha to prove his point:

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