We expect Apple’s iPad 3 will have a sharper resolution along the lines of “retina display” on the iPhone and a faster processor. The new iPad could also be released as soon as March this year and support 4G LTE networks even before it’s available on the iPhone, according to a recent Bloomberg report.  The report states the main reason for the iPad 3 supporting LTE is that the iPad has a bigger battery and can better support the power requirements of LTE. We believe this is a good move by Apple (NASDAQ:AAPL) to challenge the strong entry made by Amazon’s (NASDAQ:AMZN) Kindle Fire in the tablet market (see Apple’s Tablet Plans for 2012: iPad 3 & Keeping Kindle at Bay). The iPad accounts for around 12% of our $500 price estimate for Apple stock. Our price estimate for Apple stock is about 20% above market price.
Apple’s Strategy Around New Technology Adoption
Traditionally, Apple has always waited for a mobile network technology to reach a critical mass before incorporating in its devices. For example, when it launched the very first iPhone, it did not support 3G and instead went for a tested 2G technology. Again in October 2011, when Apple released iPhone 4S, it opted for 3G over 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. The battery-related issues are more critical for the iPhone as they could potentially prevent one from making or receiving a call. The tablet has 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 good move by Apple.Notes:
- Apple Is Said to Ready IPad 3 With Sharper Screen, LTE Access, Bloomberg citing information from three sources, January 14, 2012 [↩]