Official invitations to Apple’s (AAPL) next big event have been delivered, and October 22 is the day. “We still have a lot to cover” is the only hint of what to expect next week in San Francisco.
Almost everyone is expecting to see a new iPad and iPad Mini at the event. The crucial holiday season is fast approaching, and it has been a year since Apple last updated its tablets (other than a storage bump in January). Competitors like Amazon (AMZN), Google (GOOG), Samsung (SSNLF) and even Microsoft (MSFT) have released models that eclipse Apple’s current offerings. We could also see new MacBook Pros, an AppleTV refresh and release dates for the Mac Pro along with the latest version of Apple’s OSX operating system.
While the iPhone may get more attention, the iPad is also hugely important to Apple. As pointed out by Businessweek, iPads represented $31 billion in revenue in 2012 (20% of Apple’s total), making the iPad business alone worth more than the total revenue generated by 419 members of the S&P 500.
Moreover, quarterly iPad revenue historically has a 68% correlation to Apple stock price — that’s stronger than the stock’s relationship with iPhone revenue. In other words, if Apple moves a ton of new iPads over the Christmas holidays, there’s a pretty good chance AAPL will see a corresponding bump when Q1 2014 results are posted in January.
However, competition in the tablet space has never been tougher, iPad sales were down last quarter compared to last year, and cheaper devices running Google’s Android operating system have destroyed Apple’s once-dominant tablet position. According to numbers from Strategy Analytics, in Q2 2012 the iPad still held a 47.2% share of the world tablet market but by Q2 2013 that had eroded to just 28.3%, with Android competitors accounting for 67% of all tablets sold.
So there’s a lot riding on what Apple announces on the 22nd.
The full-sized iPad has had the same basic design since early 2012. Its Retina display with 264 pixels-per-inch density was a wow factor then, but high resolution is simply expected for today’s devices. Competing large tablets routinely offer displays of 300 PPI, and Amazon’s new 8.9-inch Kindle Fire HDX boasts a 339 PPI screen.
Don’t expect Apple to do anything about the display resolution race at this point, but the big iPad is expected to shrink, adopting the iPad Mini’s thin bezel form factor to shave nearly an inch off its width. A camera upgrade may be in the cards too, but the most significant change is likely to be an upgrade to the powerful 64-bit A7 processor that made its debut in the iPhone 5S.
However, the iPad Mini is the more critical upgrade.