Apple’s Ready to Roll Out 4G Enabled iPad 3 for Verizon and AT&T

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Rumors around the iPad 3 specifications are increasing by the day. Last week AllThingsD reported that Apple (NASDAQ:AAPL) could introduce the iPad 3 as early as the first week of March in an event in San Francisco. [1] In our earlier note titled iPad 3 Ready to Torpedo the Kindle Fire we discussed that while we expect Amazon (NASDAQ:AMZN) and Apple will continue to spar over the tablet users despite their different price points, Apple’s plan to announce the iPad 3 in early March could provide some fresh momentum to its tablet sales and stock price.

According to a recent reports, the iPad 3 could support 4G technology so that Verizon (NYSE:VZ) and AT&T (NYSE:T) could start selling it on their 4G networks. [2] Traditionally Apple has shied away from supporting a new technology as it believes in waiting for the technology to gain mass acceptance before adopting it. As Verizon and AT&T now support 4G network in most markets across the U.S., we think the 4G technology support on the iPad 3 could be a smart move by Apple.

The iPad is the second most valuable business for Apple after the iPhone and accounts for about 13% of our $550 price estimate for Apple stock. Our price estimate for Apple stock is about 10% above the current market price.

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Apple’s Strategy Around New Technology Adoption

Apple has historically waited for a mobile network technology to reach a critical mass before incorporating in its devices. When it launched the very first iPhone, it opted for a tested 2G technology over 3G. Again when it released the iPhone 4S in October last year, it chose 3G above the 4G technology.

LTE on iPhone Would Have Been a Bigger Risk

By providing LTE support for the iPad 3 over the iPhone, Apple possibly wants to try and test as well as minimize the risk of any battery-related issue arising from the iPhone. Battery-related issues are more critical for the iPhone as they can potentially prevent one from making or receiving calls. Tablets have a bigger battery and can better support the power requirements of the newer technology. Hence we think making 4G available first on the iPad 3 is a well thought out move by Apple.

Understand How a Company’s Products Impact its Stock Price at Trefis

  1. Apple to Announce iPad 3 First Week in March, AllThings D, February 9th, 2012 []
  2. Verizon, AT&T To Sell 4G iPad, Wall Street Journal, February 14th, 2012 []