Apple (AAPL) is expected to release the fifth iteration of its 9.7" tablet this fall, while rivals such as Google (GOOG) or Amazon (AMZN) have already or are about to come up with very competitive products both in terms of pricing and/or features.
Since the introduction of the original iPad in 2010, most of the updates, except maybe the Retina iPad released in early 2012, have been incremental, with speed bumps and minor new features.
Now Apple needs to bring major changes both in terms of design and features. Here's what I believe could be the improvements that would make the iPad way more attractive than the current lineup as well as the competition:
1. A new thinner, smaller and lighter design : we may expect a quite thinner form factor with narrower edges as on the iPad mini, while the 9.7" screen size should remain. That new form factor would reduce the overall weight of the device by up to 1/3rd, which would also be a welcome improvement.
2. Up to date performance : While rivals most often use Qualcomm's (NASDAQ:QCOM) Snapdragon lineup of CPUs, Apple has it's own ARM (NASDAQ:ARMH) based design. A new CPU, probably called "A7", with higher clock speeds, more RAM and up to date GPU would easily put the new iPad in par with the competition in the performance area, if not doing even better.
3. Improved camera with flash : the iPad 5 needs at least an 8MP camera with a flash. I believe it's the minimum Apple can do to answer to its rivals. In combination with the updated CPU, the new camera could also add the ability to take videos with a higher frame rate and/or resolution.
4. Fingerprint authentication : Since Apple acquired AuthenTec in July 2012, a fingerprint authentication powered Home button (Magic Home Button ?) is rumored to make its appearance on the iPhone 5S, but could also be a great differentiator feature for the next iteration of the iPad, adding not only enterprise-grade security but also a lot of convenience.
5. Improved battery life : Increasing the battery life of the iPad while making it smaller and thinner could be challenging for Apple, even though the last generation CPU and display components it will include will probably help on that area. One could however expect Apple to offer a revamped screen cover accessory which would include a battery pack extending the iPad's battery life significantly (Smart Cover --> Power Cover ?). In fact, a patent filed by Apple and describing such a feature utilizing inductive charging technology appeared in March on the U.S. Patents and Trademarks Office database.
These five improvements, would position the iPad again ahead of the competition in terms of innovation thanks to differentiating features such as the fingerprint authentication or the battery-extending cover accessory. Besides that, such a package would easily justify not only the new "iPad 5" branding but also allow Apple to keep the line-up at the same pricing levels, or between $499 for the 16GB model and $929 for the 4G capable 128GB one.
Though some of the features could be technically challenging to implement, I believe Apple has the necessary technologies, know-how, and intellectual property to bring such a product to the market in 2013.
Additionally, the iPad 2, currently sold $399 could be replaced by the iPad 4, helping Apple to keep addressing a broader audience in the 9-10" tablets segment.
Disclosure: I am long AAPL, QCOM, EMC. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.