Apple, Inc. Gets Aggressive With the New iPad

Apple (NASDAQ:AAPL) has made a few quiet product updates this morning. No event. Not much fanfare. Just a few press releases with some minor changes for the iPhone and iPad.

For starters, the company is launching a new (Product) RED Special Edition of the iPhone 7 and 7 Plus. Like all products that participate, a portion of the proceeds go toward combatting AIDS, and Apple has been partnered with (RED) for over a decade. The company says it is the largest corporate donor to the (RED) Global Fund, contributing over $130 million over the years, which is a fairly significant chunk of the $465 million that (RED) has raised since 2006. The red version does look pretty striking.

Introducing the new, old iPad
What's happening to the iPad line is more meaningful. Apple is ditching the "Air" branding and the numbers, simplifying the new tablet as just "iPad." There don't appear to be any perceptible changes to the design other than it being a tiny bit thicker (1.4 mm) than the outgoing iPad Air 2; the dimensions are the same as the original iPad Air from 2013. In terms of specifications, the new iPad is getting a newer A9 chip, and it has a slightly larger battery than the iPad Air 2 (which may explain the slight increase in thickness). Camera specs were unchanged.

The real story is the price, which is being dropped to an aggressive $329, which gets a base 32 GB of storage. Adding an extra $100 quadruples the storage to 128 GB, while cellular connectivity will set you back an additional $130 -- familiar pricing structures for Apple. The company lowered the price of the iPad Air 2 to $399 (16 GB) a year ago, so we're talking about a $70 reduction combined with more base storage. If this sounds familiar, that's probably because this is almost the exact same strategy that Apple implemented with last year's iPhone SE: Put the most current specs (most notably the processor) into a slightly older form factor while reducing the price substantially.

Brought to you by the iPhone SE playbook
Almost exactly a year ago, I noted that the iPhone SE represented a major strategic shift for Apple while acknowledging some potential implications for the iPad. While Apple didn't apply the strategy to the iPad Minis like I expected, it is still clearly borrowing pages from the iPhone SE playbook. Apple says the 9.7-inch display is the most popular, so using this strategy here is a slightly different approach; consumer preferences have been shifting toward larger displays (i.e., away from the iPhone SE's 4-inch display) for years.

Speaking of the Mini, this price change puts the 7.9-inch tablet in a precarious position. The iPad Mini 4 still starts at $399, but Apple has just increased the included storage to 128 GB as the only storage option. It still comes with an older A8 chip and a smaller display, yet costs more than the new 9.7-inch iPad. The iPad Mini 2 has now been discontinued.

The upside
The aggressive pricing will hopefully spur additional unit sales, at least on the consumer side where the iPad is positioned. There may be some modest dilution of iPad average selling prices, but only if the new 9.7-inch iPad proves popular. Apple now appears intent on focusing its developmental resources on the Pro lineup that is targeting the enterprise (support for Apple Pencil and Smart Keyboard are still reserved for Pro models).

Anything that has the potential to boost iPad sales is the right call in my book.

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Apple updates iPad line and launches red iPhone 7

Apple has updated its iPad line, dropping the “Air” branding as it boosts the specs on its mid-tier product. The new hardware launches alongside another colour for the iPhone 7 and 7 Plus, and an unusually timed announcement of a new video app, Clips.

Starting at £339 for a 32GB model with wifi only, and rising to £559 for a 128GB model with 4G, the new iPad, an update to the iPad Air 2, solidifies Apple’s intentions to split the line into three: an expensive iPad Pro, available in two sizes, for those needing a laptop replacement; a cheap iPad mini for those needing a small portable tablet; and the iPad sitting in between the two.

The new iPad sees its innards bumped from an A8X chip to the A9, previously used in the iPhones 6S and SE. The more-powerful A9X chip, introduced for the two sizes of iPad Pro, remains exclusive to that product line. Following the lead of the Mac lineup, Apple also dropped the “Air” branding from the series.

Other than the speed boost, most features in the iPad remain untouched: the device has the same camera specs as its predecessor, the same screen specs and the same rated battery life. But the differences between the iPad Pro and iPad are more stark, particularly in form factor: the retention of the eight megapixel camera means the new iPad doesn’t have the unsightly camera nubbin that graces its more expensive sibling. Perhaps not coincidentally, Apple’s tagline for the product is “Flat-out fun”.

Alongside the iPad, Apple also announced a new colour, red, for its iPhone 7 devices. Some of the proceeds from sales of the device, alongside other red products sold by Apple, will go to supporting the Product Red initiative to fight HIV and Aids. The company has also doubled the storage on its cheaper, smaller iPhone SE: the phone will now ship in 32GB and 128GB configurations, for the same price as before (starting at £379).

Unusually, Apple paired the hardware launch with the announcement of a new app, Clips. The app, which allows users to “make and share fun videos with text, effects, graphics and more”, will debut alongside iOS 10.3, the next major update to its operating system for iPhones, iPods and iPads, in April.

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