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So Apple (NASDAQ:AAPL) introduced its new iPad, whose main attraction is its retina display, with a resolution of 2048 x 1536 pixels, which is more than even todays HD TVs using 1080p resolutions (1920 x 1080 pixels).

This iPad evolution is sure to be copied by every other tablet manufacturer out there, be it based on Google's (NASDAQ:GOOG) Android or Microsoft's (NASDAQ:MSFT) Windows 8 when available. And this might have a few other consequences.

e-Paper one step closer to obsolescence

One consequence of a much better display is the way it will further threaten e-readers based on e-paper. Presently e-paper readers have 3 main advantages over LCD-based tablets when it comes to reading. One of them is battery life (30+ days), another is the behavior under sunlight (e-paper is reflective and thus readable), and the final one is that e-paper shows characters in a more natural, paper-like, way (the fact that the characters are composed of dots is not perceptible).

It so happens that with these massive resolution increases, tablets will take out that last advantage. Sure, two other advantages still remain, so this might not mean the end of the e-reader (which has substantial other disadvantages, such as not providing color, not playing video, etc)… but it's not impossible that it will reduce even further the niche that the e-readers will occupy.

This, however, brings us another consequence - if the e-reader market is further cannibalized by high-resolution tablets, this will mean that Amazon.com (NASDAQ:AMZN) will see its e-reader dominance threatened. The paradigm shift that was already eating into other forms of digital sales, might thus extend further into the only digital realm where Amazon.com had managed to establish a dominant position with its kindle e-readers. As such, this trend is a pure negative for Amazon.com.

In truth, even without this development, there was already talk about tablets, including the Kindle Fire, cannibalizing the kindle readers somewhat. This development, however, brings with it the chance that the cannibalization will be widespread. Also, the very nature of very high resolution panels means another problem for Amazon. Amazon had based its defense on the Kindle Fire using mostly cheap components, but the high resolution panels, together with their demands on graphical processing power, will mean that there won't be cheap components at the same level for quite a while. Hence, if Amazon.com is to introduce a Kindle Fire 2, it will probably have to be under spec'd regarding the display.

Better GPUs needed

This is yet another consequence. To feed a much higher resolution, one needs much more powerful GPUs (Graphical Processing Units), since the number of pixels to paint has quadrupled. Apple solved that problem by upgrading the CPU to the A5X, including a quad-core GPU using IP by Imagination Technologies. Other companies might similarly turn to Imagination Technologies, or maybe rely either on NVIDIA's (NASDAQ:NVDA) Tegra or Qualcomm's (NASDAQ:QCOM) Adreno. Still, this is all part of the normal evolution on this market, and one can't say whether this will mean larger ASPs (Average Selling Prices) for those providing GPU IP, though it might.

Conclusion

The new Apple iPad will launch a rush towards high definition screens by every tablet competitor in the market. This rush will bring with it the need for better GPUs, and will also mean a further cannibalization of the e-reader market, which might turn out a negative for Amazon.com, since Amazon's position in the tablet market is much weaker than it is in the e-reader market.

Disclosure: I am short AMZN.

Source: The Retina Display Rush