While the 2013 model of Apple’s (NASDAQ:AAPL) iPad, dubbed the iPad 5, is expected to feature the same 9.7-inch screen, the company is reportedly also testing bigger sizes for a future iPad that could replace the company’s low-end notebook computers, according to an analyst.
Ben Reitzes of Barclays Equity Research, speculated that Apple might produce a bigger 13-inch iPad in the future, and that the company’s new 64-bit A7 chip could play a significant role in this shift. Reitzes wrote in a note to investors on Tuesday that the 64-bit architecture could be implemented on a 13-inch model of the iPad, which would be capable of replacing some of Apple’s laptops, such as the MacBook Air.
“The whole iOS app ecosystem, extra-long battery life, ultraportability and user familiarity could be more compelling than a Mac if Apple made a true effort,” CNET quoted Reitzes as saying. “And we believe a larger screened iPad would be a much better PC replacement than current tablets, including the Surface, and really be able to take on higher end tasks and start another wave of notebook cannibalization.”
According to Reitzes, the inclusion of the 64-bit A7 in the iPhone 5s marks the beginning of 64-bit-optimized iOS apps, which would take advantage of the extra 4GB RAM capacity -- a requisite for a larger-screened iPad.
He also said that a 13-inch iPad could include a Smart Cover with a built-in keyboard and trackpad along with a battery to provide extra power supply and, Apple could price the device somewhere between $600 and $800.
Bloomberg reported on Tuesday that Apple is likely to hold a special event on Oct. 22 to unveil the iPad 5 and the iPad mini 2 with retina display. The report, which was based on information from “a person with knowledge of the plans,” said that Apple would also showcase the OS X 10.9 Mavericks, the next version of its Mac operating system, and the Mac Pro PC during the event.
Impact On Apple’s Business
The bigger iPad, Reitzes believes, could eventually take over from the 9.7-inch iPad and the iPad mini as Apple's second-largest revenue driver after the iPhone. At an average sale price of “about $650” with a 35 percent margin, for every 10 million units of the device sold Apple would add approximately $2 to its earnings per share, according to Reitzes.
And while a 13-inch iPad could cannibalize sales of the Mac -- a category that is already stagnating -- Reitzes said that it would be worth the shift for Apple as the new device could account for 25 percent to 30 percent of the larger notebook market.
“Even though the products are still positioned at the high end of the market, both the Mac and iPads have really lost their growth profile to smartphones. We believe a convertible strategy could change that dynamic by attracting more of the consumer wallet again,” Reitzes said.
According to a report from IDC, which saw 17 million iPads shipped in the second quarter of 2012, Apple shipped 2.4 million fewer iPads this year -- a 14.1 percent drop. The company’s market share dropped 27.9 percentage points, year-on-year, to 32.4 percent from 60.3 percent, a year earlier.
In comparison, Samsung’s (KRX:005935) second-quarter shipments of its Android-powered tablets were significantly up from the 2.1 million units it shipped during the same period in 2012. The company shipped 8.1 million tablets in the second quarter of 2013, accounting for a market share of 18 percent, up from 7.6 percent during the same period a year earlier.