Apple Inc's new 4G-equipped iPad will cement the company's market dominance, and ward off competition from a slew of Windows 8-based tablets due later this year, while a cheaper iPad 2 will see stronger demand, said analysts.
Apple on Wednesday unveiled an upgraded version of its popular iPad tablet, featuring a more powerful chip, high-definition screen, sharper camera and access to new high-speed wireless networks.
Apple's ability to increase the screen resolution, graphics capabilities, and integrate 4G LTE without compromising battery life on the new iPad will be a key differentiator versus the competition and a tough act to follow, J.P. Morgan Securities analyst Mark Moskowitz wrote in a note to clients.
Last month, Microsoft released an incomplete version of Windows 8. It is the first Microsoft operating system compatible with low-power microprocessors designed by ARM Holdings Plc and will run on tablets as well as desktops and laptops, in an effort to counter the runaway success of iPad.
But Apple's latest iPad will allow the company to sustain its competitive advantage and drive a dominant position in the fast-growing tablet market, said analysts.
According to Credit Suisse, Apple will command 66 percent share of the tablet market in 2012, thanks to its brand, hardware offering and superior ecosystem.
Apple Chief Executive Tim Cook introduced the highly anticipated third iteration of the tablet, but broke away from the tradition of calling the third-generation tablet the iPad 3, as some had expected, referring to it simply as the new iPad.
CHEAPER IPAD 2
The company said it will continue to sell the iPad 2 but dropped its price by $100. The older tablet now starts at $399 while the new third-generation wi-fi only iPad starts at $499.
Following the cut in the price of iPad 2, Apple is now well positioned to counter competition from products at the lower end of the market like Amazon.com Inc's (AMZN.O) Kindle Fire given the device's superior hardware features, say analysts.
Morgan Stanley's Katy Huberty expects the cheaper iPad 2 will have minimal impact on gross margins, and estimates the drop in price of the device will drive incremental demand of 15 million to 20 million in the United States and 38 million worldwide.
According to Thomson Reuters StarMine, 25 analysts rate Apple at strong buy, another 25 at buy, while three have a hold rating. Two analysts rate the stock at sell or its equivalent rating.
The 55 analysts covering Apple have a mean price target of $575.23 on the stock, which closed at $530.69 on Wednesday on the Nasdaq.
Apple shares rose about 1 percent to $534.10 in premarket trade on Thursday. They have fallen 3 percent since touching a year high on March 1, a day after the company's market value topped the $500 billion mark.