Apple Inc. (AAPL) unveiled its latest-version iPad and named it “new iPad” as against the popular belief that it would be called “iPad 3”. This reminds us of the time when iPhone 4S was launched, while the world awaited iPhone 5.
The “new iPad” is touted as the next catalyst for the company to drive home the advantage it already enjoys in the tablet market with two-third of market share. The features of the “new iPad” are the main distinguishing factors from its predecessors.
The state-of-the-art Retina display, a faster processor with the new A5X chip, quad-core graphics and a five mega-pixel camera are set to be the USP for the product. Among other features, the “new iPad” has a high quality video display with 1080p HD video and 10-hour battery life. With enhanced visual capabilities and faster processing speeds, the new iPad is expected to lure avid gamers away from traditional console gaming platforms from the likes of Microsoft Corp. (MSFT) and Sony Corp. (SNE).
However, the most important feature that sets it apart from previous iPads is the 4G LTE or Long-Term Evolution connectivity, which delivers approximately 10 times faster Internet speed than the 3G networks.
Now coming to the price of the “new iPad”, the wi-fi only models cost $499 (16GB), $599 (32GB) and $699 (64GB). The 4G LTE version, available with Verizon Communication Inc. (VZ) and AT&T Inc. (T), will cost $629 (16GB), $729(32GB) and $829(64GB). The preorders for the device have already started from March 7, 2012, but Apple enthusiasts will get a hand on the “new iPad” starting March 16, 2012.
Apple’s iPads constitute a significant portion of its total revenue and Apple sold approximately 32.4 million iPads in fiscal 2011, posting a massive 334.0% growth from fiscal 2010. The momentum continued in the first quarter, selling more than 15.4 million units, significantly higher than the 7.4 million units sold during the year-ago period. Recognized revenues from iPad and accessories during the quarter shot up 99.0% year over year to $9.2 million.
The release of the “new iPad” is expected to boost revenues for the current quarter and retain Apple’s dominance (62.0% market share in the FY11) in the tablet market. We believe that the latest variant will help Apple storm ahead of its nearest competitors in the tablet market, including the likes of Samsung Electronics and Amazon.com Inc. (AMZN).
We conclude that Apple remains the biggest growth story, based on its superior product pipeline, Apps, iCloud and iPhone 4S, the “new iPad” and Apple TV. Apple is also well positioned to gain from its loyal customer base and international expansion, in our view. Despite the legal complexities, we are optimistic about the company’s growth prospects in the long term. Moreover, we also expect Apple to succeed in developing markets due to the growing affluence of the middle class in key markets.
Thus, we have an Outperform rating on Apple over the long term. Currently, Apple has a Zacks #1 Rank, implying a short-term Strong Buy rating.
To read this article on Zacks.com click here.
Zacks Investment Research
