The Impact Of The New iPad

Mar.14.12 | About: Apple Inc. (AAPL)

Having recently written this article describing the changes that Apple (NASDAQ:AAPL) released for "the new iPad", I received a lot of comments. In the article, during my factual account of which rumors came true and which didn't, I also included a couple of sentences with my opinion on the significance of each update. A lot of the comments challenged the level of significance that I assigned, and pointed out key areas that I had missed. I thought, therefore, that it would be interesting to revisit the changes on the new iPad, and have a brief discussion of the significance of each change, based on the opinions expressed in the comments section of my previous article.

Siri: The most debated issue on the comments thread was not an upgrade, but a lack of upgrade, the absence of Siri. However, whilst Apple didn't include Siri in the iPad, they did include Dictation, and some commenters believed this to be very important. Experienced users said that Dictation was the part of Siri that worked well, and its inclusion was suggested as significant in areas such as the medical field, where it could be used to help GPs with patient record keeping. Possibilities were also sited in terms of App development, where users could interact by talking as well as typing. With Dictation now included in the iPad, it seems that Siri is a step up, but not a huge one. It may well be included on the next iPad, but for now it seems that Dictation is good enough.

Increased resolution: The increased resolution, despite the corny catchphrase, has definitely been agreed upon as an important upgrade. Apple's products thrive on their beauty, and the beauty of the screen itself simply adds to the beauty of the iPad. As one member commentated, it has to be experienced to be believed, and the screen resolution will definitely be something to show to your friends as soon as you unwrap your expensive new toy.

4G LTE: The case for the significance of 4G LTE was argued in both directions, but the general conclusion was that it would be hugely beneficial, but only to a specific group of consumers (those who watch a lot of videos or want to use online gaming). According to commenter Peacedawg, 50% of iPads are wifi only, which demonstrates the issue that the upgrade won't effect everyone. 4G LTE may become more relevant as apps and iCloud start to use it however, and the amount of data used by iPads will increase as the availability increases. The new technology may therefore be a draw factor for some consumers, but won't make a huge difference to most.

A5X processor: The arguments surrounding the new processor are similar to those about the 4G, in that it will affect a small number of consumers. Quadruple processing power will benefit those who need the iPad for running more complex software, and indeed may open the market to those users who had not been using it before, but the majority of users will only notice a small difference in their standard use.

The other issues discussed occasionally were the fact that the iPad is slightly thicker and heavier than the old version (a drawback, but barely noticeable) and fact that the camera has been upgraded. Neither of these issues seemed worthy of huge debate, and are probably less important than the issues discussed above.

One astute commenter made the point that if these upgrades had been released 6 months ago, then they would indeed be considered revolutionary, but it is only because of the rumors before the launch, and rapid technological advancement that meant that they were less incredible. I am sure there is some truth in this, and it again raises the issue of Apple somehow stamping out some of the more farfetched rumors prior to product release.

Overall it is becoming clear that this newest iPad is selling incredibly well. The stock price has continued to rally as news of these sales figures comes in. Commenters on the article discussed massive queues in the Apple store, jumbo jets being overloaded with cargo, and the Apple online store crashing, and all these things give a small insight into how well the sales (and subsequently stock price) are actually doing. Apple sales figures often astonish even the most optimistic analysts, and I think that, given the responses that I have read from the wider market, the iPad sales will be the same. The stock has continued to rally, contrary to my previous opinion, and leaves those who took profits earlier (like myself) wishing that they had had more faith in Apple.

I cannot see how such an enormous rally could possibly go much higher, but then again everyone has been saying that for almost the past month now. In the short term, I really couldn't say what the stock price will do. I can't see any catalysts that would cause massive upward explosions, but equally, I can't see any reason realistically why it should fall. In the long run however, I remain bullish on the stock, and the response that the market has given to the new iPad confirms my view. In the excitement of the day, I underestimated the importance of the new release, and even questioned whether the iPad might have been a disappointment. Upon reflection I withdraw that opinion. The iPad will most likely provide the next catalyst for stock price growth, and the new iPad will be an important part of that.

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in AAPL over the next 72 hours.