The Real Positives in Apple’s iPad Announcement

Though some consider the upgrades to the iPad to be merely incremental, the tablet’s 4G compatibility will play out in key ways

   

The tech world’s worst-kept secret has finally been revealed: Apple (NASDAQ:AAPL) unveiled its latest version of the iPad Wednesday. And just as the Apple-obsessed blogs had predicted, it comes with a high-definition (31-million-pixel) screen, a more advanced graphics processor to handle high-powered video games, and the ability to connect to next-generation 4G LTE networks.

Rumors about new Apple products are often wrong — when the iPhone 4S appeared without the anticipated “5” on it, fanboys were sorrily disappointed — but the new iPad’s features were close to what was expected. The only surprise seemed to be that it’s not called the “iPad 3” or the “iPadHD,” as rumored. It’s just the “iPad” now.

Apple’s stock dropped 2% during and after the new iPad’s announcement. That decline, however, probably had more to do with selling on broader market news than any sense of disappointment. And that modest decline might be welcome to Apple bulls who still believe the stock still has a good run ahead of it. Because between the lines of Apple’s announcements today, there are plenty of reasons to think the coming year will be yet another period of strong growth for Apple.

The climb to 4G LTE

On first glance, there is no single feature in the new iPad that makes it a must-have device. A high-definition screen may be something iPad 2 owners covet, but it doesn’t make older iPads any less functional. Same thing with the Apple-designed A5X processor, which the company says is four times as fast as Nvidia’s Tegra 3. Nor is the iPad’s speech-dictation technology a killer app. Or even the hi-def video camera — who wants to hold up an iPad at a public event? (Spike Lee was mocked for trying this.)

apple ipad 3 promo photo 630 300x227 The Real Positives in Apple's iPad Announcement

But taken together, these features add up to a device that is once again several strides ahead of any other tablet on the market. Even before Wednesday’s iPad’s announcement, analysts were estimating that Apple would sell 60 million tablets this year, about 50% more than last year. The initial reaction among some analysts is that they may need to upgrade their already bullish estimates for iPad sales.

And then there’s what is probably the most encouraging announcement from Apple: the iPad will be able to run on 4G LTE networks. Again, taken by itself, this isn’t a huge deal. Only a quarter of earlier-generation iPads sold were capable of connecting to 3G wireless networks. Many people connect to the Web via Wi-Fi networks, since 3G data plans can quickly get expensive when a lot of data is used.

But the inclusion of LTE technology — which lets consumers tap into 4G wireless data networks that are significantly faster than the 3G networks most smartphone owners use today — is promising news for the next version of the iPhone, which is expected in the summer or the fall. LTE isn’t a must-have feature on an iPad, but will be on an iPhone.

When chip design and high-speed service really matter

When Apple introduced the latest version of the iPhone last fall, some observers were disappointed that it didn’t include LTE technology, especially since Verizon (NYSE:VZ) and AT&T (NYSE:T) were building out their 4G networks. Apple CEO Tim Cook explained that LTE chipsets for phones “force a lot of design compromises,” by which me meant they put too much of a strain on batteries.

But the LTE-based iPads suggest that Apple has found a solution to the design limitations of early LTE chipsets. The iPad 2′s batteries could run for 10 hours before being recharged, according to Apple, and the new iPads with LTE chipsets can run 9 hours. If Apple can produce a large number of LTE-capable iPhones by the fall, it’s got another hit on its hands.

The iPhone 4S was an incremental upgrade to the iPhone 4, but it quickly became the best-selling version of the device to date, selling 37 million units in the most recent quarter. The coming iPhone 5 (if that’s what Apple decides to call it) will not only upgrade to a new phone, but to a far superior data network. Even if the new iPhone doesn’t strike people as a must-have device, the 4G network will become, for many smartphone users, a must-have experience.

So 2012 has already proven itself to be a year when Apple set the bar higher for tablets. That will keep iPad sales humming. It’s also expected to introduce the biggest upgrade in several years to the MacBook Pro.

And if the new iPhone connects to an LTE data network, that will draw in new customers as well as prompt current iPhone owners to upgrade. After Wednesday’s iPad announcement, that future for the iPhone looks much more certain. Which may be the best piece of news to come out of Apple this week.


Article printed from InvestorPlace Media, http://investorplace.com/2012/03/the-real-positives-in-apples-ipad-announcement-aapl/.

©2014 InvestorPlace Media, LLC

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