Apple (Nasdaq: AAPL ) not only straddles the burgeoning tablet and smartphone markets but also holds sway across the computer, home-entertainment, and media fields. The moves it makes can affect the future of hundreds of companies. With that in mind, we're taking a look at the week in Apple news, to see how its latest activity influences the Cupertino giant, its suppliers, and even its competitors.
Tablet competitors on the starboard!
After the relative tranquility of seven months alone on the market, the iPad is finally getting some competition. Earlier this week, BlackBerry-maker Research In Motion (Nasdaq: RIMM ) announced that its PlayBook tablet would be priced at sub-$500 levels upon its release early next year. Even though Apple's known for selling premium-priced products, competitors have had a difficult time matching the $500 price point Apple established with its entry-level iPad.
While Samsung's entry into the tablet field can be purchased for $400 from Sprint (NYSE: S ) , that price includes a two year data-plan contract. Customers wishing to buy the tablet without a contract have to pay a steeper $600 price tag. Apple has openly admitted that its future gross margins will decline because of aggressive pricing on newer "innovative" products.
That's a cagey move on Apple's part. The company has notoriously held firm on product simplicity -- such as releasing only one iPhone model -- but Apple released a Wi-Fi and 3G model of its iPad. Thanks to that move, consumers anchor to the entry-level price of the $500 Wi-Fi-only model of the iPad when in reality they tend to buy the more expensive models. Last quarter, the average iPad selling price was $645, above the price of the entry level 3G-model.
With Gartner projecting sales of tablets growing from 19.5 million this year to 208 million in 2014, Apple's decision to forgo profits now to establish a stronger leadership position should pay off. Apple's current 95% market share won't last long, but if it captures a comparable market share to what the iPhone currently sees in smartphones, that'd leave Apple positioned for 35 million iPads sold in 2014 if Gartner's tablet projections prove correct. At today's selling prices, the iPad would be contributing $22 billion a year in sales to Apple. That's more sales than Dell's (Nasdaq: DELL ) entire low-margin business generates in an entire year!
Then again, we're still early in the tablet-hype cycle, so don't take industry future sales guestimates as gospel yet.
Read all about fellow Fool Rick Munarriz's take on a recent iPad competitor's not-quite-true tales of success.
The biggest Apple news you'll ever see! Or not …
Apple titillated the masses this week with a teaser of huge iTunes news. In the end, the announcement was relatively mundane: Britain's Fab Four, The Beatles, would finally be coming to iTunes. This is pretty immaterial news for a company spinning out $20 billion in sales a quarter, but all the speculation over the announcement did highlight iTunes' deficiencies in several key areas.
The most glaring omission from iTunes is its lack of cloud-based streaming or music-storing options. Google (Nasdaq: GOOG ) has plans of its own for a "Google Music" service that will (as with all things Google) be heavily Web-based. A Google Music service would help alleviate one of the biggest weaknesses with Android: the lack of a central media manager like iTunes to accompany its mobile operating system. Apple's purchase of tiny LaLa a year ago gave the company a team of experts with experience building a streaming music platform, but Jobs & Co. seem content to hold back on a major iTunes revision until it's perfected to Apple's exacting standards.
NVIDIA gets back in the high end
Although AMD (NYSE: AMD ) displaced NVIDIA (Nasdaq: NVDA ) as the graphics-card supplier on the recent MacBook Pro refresh, that hasn't stopped NVIDIA from targeting upgraders at the top end of the market. NVIDIA announced the availability of its $1,200 Quadro 4000 card for Mac Pro users looking for a little more graphics firepower.
Although graphics cards are synonymous with video games, they're also essential for power users of photo and video editing and 3D modeling programs. NVIDIA has a strong advantage in that certain features of Adobe's industry-standard Premiere suite work only on NVIDIA processors. Meanwhile, even though NVIDIA lost out on its desktop presence on Apple machines, the company scored on Apple's new MacBook Air. The cheaper cards seen in laptops don't provide nearly the revenue (or margins) of higher-end desktop cards, but NVIDIA investors have to take some solace with that recent win. But graphics-card dominance shifts back and forth quickly in certain segments, so AMD's continuing desktop dominance is hardly assured.
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