Apple Inc. (AAPL) introduced a new version of the iPad, beefing up the two-year-old mobile computer with a sharper screen and faster chip to widen its lead over Amazon.com Inc. (AMZN), Microsoft Corp. (MSFT) and Google Inc. in the tablet market.
The device will be called iPad, carry a price tag of $499 to $829 and include a chip that enables better graphics, Apple said today at an event in San Francisco. It will also boast a 9.7-inch screen that has more pixels than traditional high- definition televisions and run on so-called long-term evolution, or LTE, wireless networks, which deliver data faster.
Chief Executive Officer Tim Cook is making the most significant upgrade yet to Apple’s tablet months before Microsoft introduces new software that will run on competing devices. The new version is also aimed at helping the company fend off competition from Google’s Android operating system, as well as Amazon.com, whose $199 Kindle Fire is gaining traction among budget-conscious buyers.
“This product refresh allows Apple to maintain its leadership position in the quickly-growing tablet market,” said Bill Kreher, an analyst at Edward Jones in St. Louis, who has a “buy” rating on Apple.
The new iPad will be available March 16, and Apple is taking orders starting today. AT&T Inc. (T) and Verizon Wireless will be the first U.S. wireless carriers to sell the new device. Telus Corp. (T), Rogers Communications Inc. (RCI/B) and BCE Inc. (BCE) will carry the new iPad in Canada.
Shares of Cupertino, California-based Apple gained less than 1 percent to $530.69 at the close in New York.
The A5X chip, made by Apple, is designed to speed the performance of the device so users can more quickly jump between tasks. It would also give applications such as games more elaborate graphics. The iPad’s display will have four times the number of pixels as the previous version, making on-screen text, images and video appear crisper and more realistic.
Apple will sell a $499 base model that has 16 gigabytes of memory and works only on Wi-Fi networks. At the high end, an $829 model has 64 gigabytes of memory and works on both Wi-Fi and the faster LTE networks.
The overhaul will help draw both new customers and existing owners who want new features, said Carl Howe, an analyst at Yankee Group.
Apple gets about 20 percent of its sales from the iPad, attracting consumers as well as business users.
With the device’s mix of touch-screen capabilities and computing power that puts it on par with some laptops, Apple has created a new category of consumer-electronics devices.
Cook also unveiled an update of the Apple TV set-top box with a new interface and a so-called mirroring function that lets video from a user’s mobile devices be played on TV. Photos taken from an iPhone will wirelessly synch using Apple TV. The device will cost $99 and also go on sale March 16.
“It will put pressure on those who are trying to undercut the iPad on price,” said Jones. “The market has changed in the past few months with the arrival of Amazon.”
Apple has sliced the price of older models to attract bargain-hunting shoppers when unveiling a new product aimed at the high end, a pincer movement used with success on the most recent iPhone. When Apple introduced the iPhone 4S in October, it reduced the iPhone 4 price to $99 and the made the iPhone 3GS free, with a two-year wireless contract.
Tablet Market Leader
According to market research firm Gartner Inc., 103.5 million tablet devices will be sold in 2012, with Apple accounting for two-thirds of those. The figure will rise to 326.3 million in 2015.
The company’s share will drop to 46 percent by 2015 as Google’s Android gains customers and Microsoft enters the market.
Tablets introduced by Research In Motion Ltd. (RIMM), Samsung Electronics Co. (005930) and Hewlett-Packard Co. (HPQ) haven’t gained much interest. Amazon’s Kindle Fire, on sale since November, has lured buyers because of its lower price, and Amazon’s website gives it a sales channel on par with Apple’s retail stores, said Sarah Rotman Epps, an analyst at Forrester Research Inc. Amazon’s selection of movies, music and applications also is appealing to customers, she said.
“Tablets are about services,” said Rotman Epps. “That’s why Amazon has succeeded where others have failed.”
A new wave of tablets will be entering the market with Microsoft’s introduction of Windows 8, a remake of the company’s flagship operating system intended to work more easily with smartphones and tablets. Hewlett-Packard has said it will introduce a tablet using the software, which analysts expect will be released later this year.
While Windows 8-based products are being completed, Apple may sell 11.3 million iPads in the quarter ending March 31, more than double unit sales from a year earlier, according to Brian Marshall, an analyst at ISI Group in San Francisco.
Microsoft, based in Redmond, Washington, will eventually become a strong competitor, though the longer Windows 8 takes to hit the market, the harder it will be to gain traction with customers, said Rotman Epps.
Apple may sell 60 million iPads in all of 2012, ISI predicts, about 50 percent more than last year. Apple is the largest maker of personal computers if the iPad is included in the count, according to Canalys.
‘Just Getting Started’
The iPad has helped make Apple the world’s most valuable company, worth $494.8 billion based on today’s closing stock price. Since the device went on sale in April 2010, Apple’s stock has risen 125 percent and quarterly sales have almost tripled.
Now that the iPad works on so-called fourth-generation wireless networks, Apple will probably make the newest version of the iPhone work on the next-generation system too, said Ben Reitzes, an analyst at Barclays Capital.
Cook hinted during today’s presentation that more big announcements are in store from Apple this year.
“We’re just getting started,” Cook said. Customers have “a lot to look forward to.”
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