New iPad A Positive For Nuance, Qualcomm

Includes: AAPL, NUAN, QCOM
by: Todd Campbell

Apple's (NASDAQ:AAPL) iPhone and iPad have invented a new category of how we interact with both hardware and software. So it was fitting the central theme of this week's Apple event at the Yerba Buena Center for the Arts was the post-PC world.

High-Def Envy and "Siri Lite"

Rumors were rampant heading into the event with most centering on the launch of a new, more refined iPad. Apple fans weren't disappointed as the iPad received the much hyped retina display - with more pixels than a 1080 display - and voice dictation.

The teardowns will show up in earnest mid month. But, until then we can make some guesses about two suppliers. Nuance (NASDAQ:NUAN) is most likely the voice recognition software behind the iPad, given its integration in Siri. And, Qualcomm (NASDAQ:QCOM) likely won the baseband slot for both AT&T (NYSE:T) and Verizon (NYSE:VZ) versions.

The Siri lite voice recognition is more like what Nuance provides through Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG) and various other products than what powers Siri. The absence of a full-fledged Siri can be blamed on its data hogging demands and Apple's rolling out Siri support in new markets including Australia, France, Germany and Japan. Regardless, Nuance shareholders should be pleased given Siri was the first feature highlighted at the show, and millions of iPad devices with voice recognition will be sold this year. Add to that more Siri users worldwide on iPhones and momentum is likely to support revenue growth.

Worldwide Functionality

As for Qualcomm, the new iPad supports both AT&T's and Verizon's LTE, as well as Telus (NYSE:TU), Rogers (NYSE:RCI) and Bell in Canada. Last year, Apple opted to stick with Intel owned Infineon's chip for its AT&T iPad 2. But, with all devices 3G world-ready and a claims the device supports more bands than any other, evidence points to Qualcomm's multi band chips, which I wrote about earlier this month.

We'll have to wait for the official teardowns to see if that's the case, especially given there will be two different iPad SKU's - one for each network. But, just like Apple did with the Qualcomm chip on its Verizon iPhone 4S, it could simply suggest the carriers opted to simply switch off functionality for the competitors network. Adding support to the argument is Qualcomm's announcement last fall that it had started shipping its 4G LTE Gobi 4000 chipset, which bundled 4G and 3G.

For those so inclined, here's the link to Apple's official overview of the technical specs for the iPad 3.

Disclosure: I am long NUAN, QCOM.