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Apple Puts iPad 2 Into Production; AT&T, Verizon to Sell It

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Apple (Nasdaq: AAPL  ) has started manufacturing the sequel to its popular iPad tablet, according to a report in the Wall Street Journal, a development that, though expected by analysts, will add even more ferment to the burgeoning tablet market. Additionally, the report said AT&T (NYSE: T  ) Mobility and Verizon (NYSE: VZ  ) Wireless will carry the new iPad, but that Sprint Nextel (NYSE: S  ) and T-Mobile USA will not. 

The report, which cited unnamed sources familiar with the matter, said new iPad will be thinner and lighter and have more memory and a more powerful graphics processor than its predecessor. The report also said the iPad sequel will have at least one camera to enable video conferencing, a feature that was left off the original iPad but has since become standard in many other tablets. Interestingly, the report said that the new iPad will not sport an improved screen resolution, which is due in part to Apple's inability to obtain higher-resolution screens for a device with a screen that's more than double the size of the company's iPhone.

An Apple spokeswoman did not immediately respond to a request for comment.

Apple has sold 14.8 million iPad since debuting the gadget in April, including 7.33 million in its most recent quarter. The iPad contributed $4.6 billion to Apple sales, or 17 percent of its total revenue, in the company's most recent quarter. 

J.P. Morgan analyst Mark Moskowitz wrote in a December research note that he expects tablet shipments will reach 46 million in 2011, totalling $24.9 billion. That will grow to 78.2 million and revenue of $34.1 billion in 2012, the firm predicted -- adding that Apple will retain a tight grip on the market. J.P. Morgan's estimate for 2011 is slightly higher than IDC's prediction of 42 million tablet shipments in 2011.

Despite Apple's headstart--many competitors still have not commercially launched their answers to the iPad--the rest of the market is not standing still. Hewlett-Packard is expected to unveil at least one tablet today running Palm's webOS platform. Further, a host of companies, including LG, Motorola Mobility (NYSE: MMI  ) and Samsung, are expected to launch tablets running version 3.0 of Google's (Nasdaq: GOOG  ) Android platform, which is specifically designed for tablets. Further, Research In Motion (Nasdaq: RIMM  ) is expected to soon launch its BalckBerry PlayBook tablet, which runs on QNX software. 

This article originally published here. Get your wireless industry briefing here.

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  • Report this Comment On February 09, 2011, at 3:13 PM, Aryabod wrote:

    2011 will mark the end of Apple's reign as king of the hill in smartphones, especially after Verizon fails to meet the expectations most analysts have on the droves of consumers flocking to Verizon, only because of their iPhone.

    What many of these analysts fail to realize is the costs associated with making this transistion on the part of Verizon and its competitors. The following points should be heeded to before one gives Verizon's iPhone too much of a rosy picture:

    1. For those iPhone subs. at ATT they are going to have to purchase new iPhones if they wish to port their numbers over to a VZ iPhone. GSM iPhones won't work on a CDMA platform. Nor will CDMA phones work in most coutries around the globe since Verizon's platform doesn't use SIM cards. Another disadvantage on VZ's CDMA iPhone is that it won't allow Multitasking Voice and Data.

    2. Most consumers are locked into two year family contracts making a switch very costly with multiple ETFs.

    3. VZ's iPhone 4 won't be a 4G iPhone, but rather a slower 3G version when compared to T's HSPA+ .

    4. Not too soon after VZ's launch of the iPhone they will be introducing a slew of Android based phones with 4G speeds, taking away much of Apple's iPhone hyperbole. These new Android based phones will make the iPhone 4 look passe and outdated.

    5. Most of us that wanted an iPhone most definately didn't wait 4 years for VZ to launch its version of the iPhone, hence it would be fair to say most of VZ's iPhone purchases will come from their own base, essentially canabalizing their existing market. This in turn will lower margins or ARPU as is the commonly used lingo in telecom for VZ, since the iPhone subsidies are approx. $400 compared to the Android based smartphones.

    6. VZ is going to have to do much better than introducing an outdated iPhone 4 if they wish to steal consumers away from Sprint or T Mo. S is no longer a laggard when it comes to customer service, line up of smartphones and network speeds. In fact it seems they are taking most of the innitiatives. They were the first with 4G and are still the only telco with a mature 4G network based on future OFDM platforms that support 4G smartphones.

    7. A $40 premium to use VZ's phones is what will prevent many consumers from switching from S to VZ, especially when VZ has little to offer most consumers that they don't already have at Sprint.

    Conclusion: the iPhone at Verizon is going to face a lot of competition from the VZ's Android 4G phones and I suspect will do much worse than the most pessimistic Analyst's expectations.

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