Apple’s Tablet Plans for 2012: iPad 3 & Keeping Kindle at Bay

+26.32%
Upside
142
Market
179
Trefis
AAPL: Apple logo
AAPL
Apple

The speculation around Apple’s (NASDAQ:AAPL) tablet plans is heating up in true Apple fashion with one camp favoring an enhanced, more powerful iPad 3 while another endorses cheaper versions to help spark higher penetration and fend off competition from the rapidly selling Kindle Fire. We believe that both scenarios are possible. Whichever way it leans, Apple is fully aware of the rapid strides of  Amazon’s (NASDAQ:AMZN) Kindle Fire while other non-Apple tablets have failed to make any mark, like Research in Motion’s (NASDAQ:RIMM) PlayBook.

iPad accounts for about 12% of our $500 price estimate for Apple stock. Our price estimate is about 25% above market price.

See our complete analysis of Apple here

Relevant Articles
  1. What A Recession Would Mean For Apple Stock
  2. Is Apple Stock A Buy At $140?
  3. Forecast Of The Day: Apple’s Other Product Revenue
  4. Will Apple Stock Bounce Back Post Q2 Results?
  5. Company Of The Day: Apple
  6. Will Apple Stock Remain A Safe Haven In An Uncertain Market?

Amazon on Fire with Kindle Fire

According to a report from iSuppli, Amazon’s Kindle Fire tablet could have surpassed all other Apple iPad rivals in Q4 2011 to take the second position in the tablet market. [1] The report suggested that iPad would continue to dominate the tablet market with a market share of 66% while Kindle’s market share would increase to around 14%. The biggest loser would be Samsung for which the market share would decline to around 5%, down from 8% in Q3 2011.

What could Apple’s strategy be?

According to a recent DigiTimes report, Apple could come up with two iPads, one targeting the high-end segment and the other the mid-range. [2] The report also suggests that Apple could price iPad 3, iPad 2 and entry level differently to achieve this distinction. iPads 3 could be priced at $499, iPad 2 pricing could be cut to $399 and entry level iPad could be priced at $299.

We believe the iPad 3 will be a high performance iPad with some attractive features such as voice recognition service Siri, presently an important feature of iPhone 4S. The new iPad might also have high resolution screen as suggested by a few reports. [3] We also believe Apple could come up with a totally different version of the iPad, possibly named iPad mini. The iPad mini could be a cheaper iPad with lower specifications to counter the lower priced tablet segment currently dominated by Amazon.

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

Notes:
  1. Red-Hot Kindle Fire Blazes its Way to Second Place in Media Tablet Market, iSuppli, December 2nd, 2011 []
  2. Digitimes Research: iPad pricing to change tablet game, January 3rd, 2011 []
  3. iPad 3 with high-res display is definitely happening, analyst says, BGR, November 22nd, 2011 []