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iPad 2 Can Maintain Apple Share: Analysts

3/07/2011 01:02:00 AM Eastern

NEW YORK - The iPad 2's performance improvements, weight reduction, price competitiveness with other tablets, and addition of a Verizon Wireless version will help Apple fend off major reductions in its commanding tablet share in the coming year in the face of growing competition, analysts said.
Still, Apple left competitors with multiple opportunities to chip away at its share, they said. Other tablet makers, for example, have designed tablets for use on the Sprint and T-Mobile networks, whereas separate versions of the iPad 2 operate only in the AT&T and Verizon networks. Some planned tablets from competitors incorporate 4G HSPA+ and LTE technologies, whereas separate iPad 2 versions will operate in the AT&T and Verizon 3G networks. In addition, the iPad 2 still doesn't support Adobe Flash video, the major web-video format.
"Competitors still have a play with carriers that Apple doesn't support, such as Sprint and T-Mobile, and Motorola can take advantage of LTE support at Verizon Wireless," said Ross Rubin, The NPD Group's executive director of industry analysis for consumer technology. "Honeycomb [Android 3.0] will eventually provide stronger competition but will need more devices and more native tablet apps," he added.
The dramatic thickness reduction will enhance the visual appeal at retail, he added, and the weight reduction of 15 percent, to 1.3 pounds, "while not as great, will likely prove more of a boon in actually using the device."

 

ple generational changes, agreed Rubin and Peter King, touchscreen and tablet strategies director at Strategy Analytics. Though the enhancements aren't magnitudes ahead of the current iPad, King said, "We believe iPad 2 raises the bar higher even though there were no real surprises. We all knew Apple would respond as competitors attempted to leapfrog the current market leader in terms of technology."
Many of the iPad 2 improvements - such as dual-core 1GHz processor and video chat - simply match the features of competing tablets now starting to arrive on the market. In fact, one improvement - video chat - operates only over Wi-Fi, while on other tablets - including the Motorola Xoom and Galaxy Tab, it operates over Wi-Fi and 3G.
Nonetheless, King said, "iPad 2 does enough in terms of technical and form factor improvements to enable Apple to affirm its competitive advantage."
With that in mind, King expects Apple will continue to dominate the tablet market in 2011 and 2012, though the company's worldwide unit shipment share will drop to 75 percent in 2011 from last year's 84.1 percent. "It remains our view that the competitors are fighting with each other this year, not with Apple," he said.
Like other analysts, Canaccord Genuity technology analyst Michael Walkley also believes "Apple will continue to hold dominant market share of the fast-growing tablet market despite increased competition."
Walkley, who attended the iPad 2 launch in San Francisco, said he was "impressed with both the features and pricing of the iPad 2 relative to competing tablet offerings announced at CES and [Mobile World Congress]."
The iPad 2, he continued, "has raised the bar relative to competing tablets with impressive hardware specifications, competitive pricing and the leading software ecosystem that includes over 65,000 iPad-specific applications."
In addition, Walkley said, "we believe that Apple's pricing of the iPad 2 ($499 for Wi-Fi-only, $629 for 3G base models) will pressure sales of competing offerings including the Motorola Xoom ($599 subsidized/$799 unsubsidized) and BlackBerry Playbook (expected $499) as we believe consumers will overwhelmingly choose iPad 2 vs. other tablets at these price points."
Another analyst pointed out that two new iPad apps - Garageband and iMovie - underscore Steve Jobs' assertion at the launch event that the iPad represents the post-PC era. The two applications have existed on Apple computers for years, said Bryan Gonzalez of the Entertainment Technology Center @ USC, a non-profit consortium in the entertainment and consumer electronics industries.
With iMovie and Garageband, NPD's Rubin added, "Apple showed it's not shying away from putting some of its most processor-intensive consumer apps on the iPad."
Apple plans March 11 U.S. availability of the iPad 2, which is 33 percent thinner than its predecessor but adds new Apple dual-core 1GHz processor, dual cameras, FaceTime Wi-Fi video chatting, iOS 4.3 operating system and a gyroscope.
For the first time, a version with embedded 3G cellular will be available for the Verizon Wireless network. Separate versions will be available for GSM/HSPA networks, including AT&T and international carriers. A Wi-Fi-only version will also be available, like before.
Neither the AT&T nor Verizon versions operate on those carriers' 4G networks.
Despite its smaller size and weight, the iPad 2 maintains its predecessor's 9.7-inch display size with 1,024 by 768 resolution and LED backlighting.
It will be available in white and black at the same prices as the current iPad. Prices for the Wi-Fi-only versions start at $499 for the 16GB model. Prices for the 3G GSM/HSPA versions for AT&T and international carriers start at $629 for the 16GB version. The $629 price is also the starting price for a 3G Verizon Wireless 3G versions.
The iPad 2 ships in 26 other countries on March 25 and later in additional countries.
Also on March 11, Apple will begin offering the iOS 4.3 operating system as a free upgrade for the current iPad, to the GSM iPhone 3G S and 4, and to the iPad Touch third and fourth generation.
With Apple's new A5 dual-core 1GHz processor, the iPad 2 will deliver 9x faster graphics processing than the company's previous single-core 1GHz processor, yet battery life remains the same at 10 hours, the company said.

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