In just a few weeks, Apple (NASDAQ: AAPL ) is expected to release updates to the iPad, and while a lot of attention is focused on what the products will look like, the more important fact is whether or not the devices will utilize the 64-bit A7 chip -- and how that could change the PC industry.
Apple purists may squirm at the idea of an iPad/notebook hybrid and both Steve Jobs and Tim Cook have said such a device would never work. But there's growing evidence that a hybrid may be the way to go for Apple.
The dreaded hybrid
The case for a hybrid device -- one that pairs the iPad with portable dock, keyboard, and track pad -- starts with the massive decline of PC sales across the board, including at Apple. Last quarter, Apple got 14% of its revenue from Macs, which was a 7% year-over-year decline on a unit basis. Even the hugely successful iPad posted its first--ever decline in shipments in Q3 2013 with a 14% drop.
So one quarterly drop obviously doesn't mean Apple can't sell iPads anymore, and this month's refresh could very well help reverse the trend. But last quarter the overall PC market declined 12% year over year, which shows consumers are increasingly looking toward tablets to replace those devices -- and the fact is that some of them aren't cut out for the job. That's where a beefed-up iPad could make a difference.
Chris Whitmore from Deutsche Bank Equity Research said on Monday that a 64-bit iPad "should enable a greater array of enterprise App development and facilitate greater enterprise penetration over time." He believes that iPads will help put increasing pressure on enterprise PC sales through 2015.
But a note from Barclay's analyst Ben Reitzes this week took a 64-bit iPad to another level. Reitzes highlighted some reasons why a 64-bit iPad could lead the way for additional PC cannibalization and an entirely new productivity segment altogether. Although he thinks Apple may be more than a year away from a hybrid device, he believes the app ecosystem, long battery life, and "ultraportability" of the iPad lend itself well to a hybrid conversion that could take even more sales away from the PC market.
Back in April, Apple filed a patent showing an iPad-notebook hybrid that looks similar to hybrids on the market right now. While we all know that Apple filing a patent for something doesn't necessarily mean the company will bring the device to market, it does show that it may not be as philosophically opposed to such a device as it's led on.
IDC released a report earlier this year saying, "Over the next four years, the number of people accessing the Internet through PCs will shrink by 15 million as the number of mobile users increases by 91 million." Even if the IDC prediction is true, it won't stop consumers from needing a device that can handle more than just Internet browsing. An iPad hybrid would fit nicely into a category that's still technically mobile, but much more adept at handling tasks like light video editing, graphic design, and other functions many tablets aren't quite capable of today. As the computing trend moves more to mobile operating systems versus PC operating systems, it seems Apple eventually may not have much of a choice whether or not an iPad hybrid hits the market.
The beginning of the end
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