Apple’s Jobs Reappears to Unveil IPad 2 as Rivals Circle
Steve Jobs, CEO of Apple Inc.
David Paul Morris/Bloomberg
Steve Jobs, chief executive officer for Apple Inc. speaking on March 2, 2011.
Steve Jobs, chief executive officer for Apple Inc. speaking on March 2, 2011. Photographer: David Paul Morris/Bloomberg
March 3 (Bloomberg) -- Eugene Munster, an analyst at Piper Jaffray Cos., talks about Apple Inc.'s new version of the iPad and investor sentiment toward Chief Executive Officer Steve Jobs. Jobs emerged from medical leave to introduce the iPad 2 at a company event in San Francisco yesterday. Munster speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)
March 3 (Bloomberg) -- Greg Harper, president and founder of Harpervision Associates Inc., talks about Apple Inc.'s iPad 2 tablet computer, introduced yesterday. Harper speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)
March 2 (Bloomberg) -- Michael Gartenberg, an analyst at Gartner Inc., talks about Apple Inc.'s introduction of its iPad 2 tablet computer today and the company's strategy versus its competition. The iPad 2 features a faster chip and front and rear cameras, which allow for videoconferencing. It’s also 33 percent thinner than its predecessor. Gartenberg speaks with Pimm Fox on Bloomberg Television's "Taking Stock." (Source: Bloomberg)
Apple’s Steve Jobs Takes Stage to Introduce IPad 2 Tablet
David Paul Morris/Bloomberg
Members of the media and invited guests look over the new iPad 2 at an Apple Special Event in San Francisco.
Members of the media and invited guests look over the new iPad 2 at an Apple Special Event in San Francisco. Photographer: David Paul Morris/Bloomberg
Apple’s Steve Jobs Takes Stage to Introduce IPad 2 Tablet
Apple Inc. via Bloomberg
The new Apple Inc. iPad 2 was introduced March 2, 2011 in San Francisco.
The new Apple Inc. iPad 2 was introduced March 2, 2011 in San Francisco. Source: Apple Inc. via Bloomberg
Apple’s Steve Jobs Takes Stage to Introduce IPad 2 Tablet
Apple Inc. via Bloomberg
Apple Inc.'s iPad 2.
Apple Inc.'s iPad 2. Source: Apple Inc. via Bloomberg
Apple Inc. (AAPL) Chief Executive Officer Steve Jobs emerged from medical leave to introduce a new version of the iPad, aiming to stay ahead of a stampede of tablet- computer rivals.
The iPad 2 features a faster chip and front and rear cameras, which allow for videoconferencing. It’s also 33 percent thinner than its predecessor, released in April. The product will ship in the U.S. on March 11 and internationally on March 25, at the same $499 starting price as the previous model.
While the iPad 2 has few features that analysts hadn’t predicted, it puts Apple one generation ahead of competitors. As the company squares off against products running Google Inc. (GOOG)’s Android software and tablets from Hewlett-Packard Co. (HPQ) and Research In Motion Ltd. (RIM), it’s also counting on lower prices, a chain of more than 300 stores and a broad array of applications.
“Rivals should be scared,” said Apple investor Michael Binger, a fund manager at Thrivent Asset Management in Appleton, Wisconsin. “Steve Jobs has come up with an iPad that’s the same price, it’s faster, it’s lighter, it has all the apps and ecosystem that go around it.”
Jobs’s reappearance, his first public event since taking his leave on Jan. 17, also helped assure investors that he still participates in decision-making. The 56-year-old CEO, who has battled a rare form of cancer, has taken time off for medical reasons three times in the past seven years.
Stock Bounce
Apple shares advanced after Jobs appeared on stage. The stock, up 9.2 percent this year, rose $2.81 to $352.12 on the Nasdaq Stock Market.
“He was here to make a statement that he’s still very much involved,” said Gene Munster, an analyst at Piper Jaffray Cos. in Minneapolis. “That’s just as big as the iPad announcement. There are still going to be questions about his health, but he certainly answered a lot of those today.”
In the past year, the iPad has become one of Apple’s top sellers, surpassing the almost decade-old iPod media player. It’s also inspired competition from Motorola Mobility Holdings Inc., Samsung Electronics Co. and Research In Motion. There are currently 102 tablets from 64 makers either on sale or in development, according to consulting firm PRTM.
“Everybody else is coming up with release one and they are coming out with release two,” said Carl Howe, a director at Yankee Group, a research and consulting firm.
Apple had little competition when it entered the market, said Howe, noting that the iPad was one of the fastest businesses to ever reach $1 billion in revenue. “The challenge is how you follow that up.”
Android Tablets
The iPad ranges from $499 for a base model with 16 gigabytes of memory to $829 for a 64-gigabyte model with 3G Internet access. Motorola’s Xoom tablet computer starts at $599 with a two-year wireless contract, and Samsung’s Galaxy Tab starts at $249.99 with a two-year contract. Those models rely on Google’s Android, an operating system that also runs smartphones.
Jobs touted Apple’s range of applications as an edge over competitors. The company said its App Store has more than 350,000 programs, with at least 65,000 of them taking full advantage of the iPad’s capabilities.
“Our competitors were just flummoxed,” Jobs said.
The iPad 2 also is as much as 15 percent lighter than its predecessor, and it features a gyroscope that can be used in gaming and other apps. The device comes in black or white.
Next Generation
“They add enough features to make it attractive,” said Apple investor Michael Obuchowski, chief investment officer at First Empire Asset Management in Hauppauge, New York. “The first-generation Google Android tablets now are probably better than the first generation of iPad, so there was a need for a response from Apple.”
Motorola said this week that sales of the Xoom, available through Verizon Wireless, started “relatively well,” and it plans to introduce tablets with other carriers this year. The Xoom drew accolades from reviewers -- including Bloomberg’s Rich Jaroslovsky, who called it a “worthwhile competitor.”
Samsung said on Jan. 27 that it had shipped 2 million Galaxy Tab devices. RIM, meanwhile, plans to introduce its PlayBook tablet this year, and HP is readying a device that uses software from its acquisition of Palm Inc.
The iPad 2 will account for at least 20 million tablet computer sales in the U.S. this year, or 83 percent of the market, said Sarah Rotman Epps, an analyst at Forrester Research Inc. in Cambridge, Massachusetts.
‘Fatally Flawed’
“The competing products we’ve seen announced so far from Motorola, RIM, HP and others, while impressive, have fatally flawed price and distribution strategies,” Rotman Epps said today in a blog post.
Today’s iPad announcement also affected the stock of suppliers. Silicon Image Inc. (SIMG), a maker of chips that transmit high-definition television content between devices, rose 22 percent after Apple introduced an adapter to output video from an iPad to a TV. Zagg Inc. (ZAGG), which sells accessories such as iPad cases, plunged 24 percent after Apple introduced its own magnet case for the tablet.
The first version of the iPad sold 14.8 million units through December, generating $9.6 billion in sales. This fiscal year, the iPad may bring in as much as $16.3 billion in revenue for Apple, according to Sanford C. Bernstein & Co. in New York. The iPhone, now Apple’s top-selling product, didn’t cross that threshold until last year, more than three years after its introduction.
Cook’s Prediction
The global tablet market is projected to surpass 200 million units in 2014, up from 17 million in 2010, according to PRTM. Apple Chief Operating Officer Tim Cook, who has taken over day-to-day operations while Jobs is on medical leave, told Bernstein analysts that the tablet market will eventually surpass the worldwide market for personal computers, which totaled 350 million sold last year.
If Cook’s forecast proves correct, the iPad may eventually generate $60 billion to $100 billion in sales for Apple, according to Bernstein’s Toni Sacconaghi, who published a report after meeting with Apple executives last week. That compares with Apple’s total revenue of $65.2 billion in fiscal 2010. The report didn’t say when iPad sales might reach that level.
Today’s event is Apple’s second major product announcement since Jobs went on leave. Cook, who didn’t speak at today’s event, represented the company when it announced the iPhone would be available through Verizon Wireless, ending AT&T Inc.’s exclusive hold in the U.S.
Sales Debut
The iPad 2 may top the debut of the first generation, which sold more than 300,000 in its first day and 1 million in its first 28 days, Brian Marshall, an analyst at Gleacher & Co., said in an interview yesterday on Bloomberg West.
The device has been adopted by companies such as JPMorgan Chase & Co., Wells Fargo & Co. and Archer-Daniels-Midland Co. At Apple’s annual shareholder meeting last week, Cook said the company is adding to its sales force to sell more iPhones and iPads to businesses.
The idea is to go beyond what PCs can do, rather than just trying to create a tablet version of traditional computers, Jobs said today.
“Our competitors are looking at this like it’s the next PC market,” he said. “That is not the right approach.”
To contact the reporters on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net; Cliff Edwards in San Francisco at cedwards28@bloomberg.net
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net.
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