Apple Unveils New IPads Amid Crowded Tablet Market

Oct. 22 (Bloomberg) -- Phil Schiller, senior vice president at Apple Inc., speaks about the new iPad Air tablet. He speaks at an Apple event in San Francisco. (This is an excerpt from the event. Source: Bloomberg)

Apple Inc. (AAPL) introduced new iPads in time for holiday shoppers, as it battles to stay ahead of rivals in the increasingly crowded market for tablet computers.

Apple Chief Executive Officer Tim Cook debuted a new iPad mini with a high-definition screen, as well as a thinner and lighter design for the larger tablet named the iPad Air. The iPad Air goes on sale on Nov. 1, starting at $499. The iPad mini will be available later in November for $399 and up, higher than the previous model’s starting price of $329.

“This is just the beginning for iPad,” Cook said to a crowd of media and technology-industry insiders at the Yerba Buena Center for the Arts Theater in downtown San Francisco. “We have been busy working on the next generation of iPad.”

In the year since Apple last updated the iPad, companies including Samsung Electronics Co. (005930), Asustek Computer Inc. (2357), Google Inc. (GOOG) and Amazon.com Inc. (AMZN) have unveiled new tablets, often at lower prices. The competition adds pressure to Apple because the iPad is its second-largest source of revenue after its flagship iPhone. Success of the new models will be critical as the Cupertino, California-based company attempts to reignite revenue growth, which has slowed.

Photographer: Noah Berger/Bloomberg

Tim Cook, chief executive officer of Apple Inc., displays the iPad Air for a photograph during a press event at the Yerba Buena Center in San Francisco on Oct. 22, 2013. Close

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Photographer: Noah Berger/Bloomberg

Tim Cook, chief executive officer of Apple Inc., displays the iPad Air for a photograph during a press event at the Yerba Buena Center in San Francisco on Oct. 22, 2013.

New Macs

Apple today also introduced new Mac software, called Mavericks, which is available free of charge. The software may stoke hardware sales, with the company also showing an updated high-end Mac Pro desktop computer starting at $2,999 aimed at professions that need extra computing power, as well as new MacBook Pro laptops.

“We still believe deeply in this category and we’re not slowing down on our innovations” in Macs, said Cook. The Mac Pro will be assembled in the U.S., he said.

Apple shares fell less than 1 percent to close at $519.87 in New York, leaving the stock down 2 percent for the year, compared with a 23 percent increase in the Standard & Poor’s 500 Index.

Apple is updating its products ahead of the lucrative holiday shopping season. As part of the lineup, the company released new iPhones -- the iPhone 5s and 5c -- last month.

Yet more than three years after Steve Jobs unveiled the iPad, the growth of the global tablet market is showing signs of decelerating. Tablet shipments are projected to increase 28 percent in 2014 to 301 million units, after doubling in 2012, according to Counterpoint Research.

Competitors are cutting into Apple’s lead. The company’s tablet market share slid to 32 percent in the second quarter, compared to 60 percent a year earlier, according to IDC.

Samsung, Asustek, Lenovo Group Ltd. (992), Acer Inc. (2353) and others are offering devices with prices starting at less than half of the iPad mini’s previous starting cost of $329. Amazon.com introduced new Kindle Fires last month with higher-resolution screens at prices starting from $229, while Microsoft Corp. and Nokia Oyj (NOK1V) took the wraps off new tablets this week.

Biggest Usage

Cook alluded to the competition today, noting that “everybody seems to be making a tablet.” He said the iPad is still used more than four times more than all other tablets put together. Apple has sold more than 170 million iPads, he said.

In a move to spur growth, Apple will also roll out the new iPad Air in China at the same time as other markets, said Phil Schiller, Apple’s senior vice president of product marketing. Apple also dropped the price of last year’s iPad mini model to $299.

No Worries

Benedict Evans of Enders Analysis said the higher starting price of the iPad mini shows Apple isn’t worried about competitors. He said the tablet market has bifurcated into two, with Apple controlling the high-end with its collection of popular iPad-specific apps, and a slew of other lower-end tablets used mainly to watch video or browse the Web.

“Apple apparently doesn’t fear much tablet competition,” he said.

Some rivals’ tablet efforts have flopped. Microsoft took an $900 million writedown earlier this year after its Surface failed to catch on with consumers.

Apple is also going on the offensive by offering its operating system software for free. That threatens companies such as Microsoft, which typically sells its software in pricier packages. Carl Howe, an analyst at Yankee Group, said Apple giving away its software is tantamount to “challenging the Microsoft model.”

Developers at Apple’s event said the updated iPads will attract consumers, especially the lighter and thinner iPad Air.

“When you have a lighter weight device, you’re going to get more usage,” said Mike McCue, co-founder of news-reading application Flipboard Inc. “People are more likely to throw it in a backpack, pick it up or use it.”

Some carriers and developers immediately began using the new iPads as a marketing opportunity. T-Mobile US Inc. (TMUS), which is selling the iPad for the first time, is offering users 200-megabits of high-speed data service at no extra cost, to help the fourth-largest carrier stand apart from its rivals. The 200-megabit allotment covers about five Web page downloads a day, according to the company’s data calculator. Users can buy 2.5GB of additional data for $30 or 4.5GB for $40.

To contact the reporter on this story: Adam Satariano in San Francisco at asatariano1@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net

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