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1 Apple Partner That Doesn't Want to See an iPad Pro

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Apple (NASDAQ: AAPL  ) may be in the middle of testing a larger and more powerful version of the iPad that's a hybrid of a notebook and tablet, if reports from The Wall Street Journal prove true. And while that could be very good news for Apple investors, other companies that rely on selling components for Apple's MacBooks, specifically Intel (NASDAQ: INTC  ) , may not welcome such an innovation with the same excitement.

As data from NPD recently showed, sales of the MacBooks and desktops dropped 7% in 2013, year over year. There's an obvious shift away from notebooks to tablets, which is a good indicator as to why Apple may want to release an iPad Pro tablet. That should be a bit troubling for Intel because the company supplies the processors for Apple's MacBook lineup and Apple wouldn't use Intel's chip architecture in an iPad Pro. Most tablets, including Apple's, use processors based on ARM Holdings' chip architecture.

Patrick Wang, an analyst at Evercore Partners, said in reference to a possible iPad Pro launch this year, "This would hit Intel in an area of strength -- enterprise NBs -- and open up the monopoly to price competition, a common theme for Intel in 2014."

Considering that consumers are starting to move toward tablets and Apple's MacBook sales have been slowing recently, a major shift in Apple's product strategy toward a workhorse iPad could hurt Intel both on the Apple side and the enterprise-notebook side.

This past quarter Intel brought in about $8.4 billion in revenue from its PC client group division, down 3.5% year over year. That revenue could be hurt even more if Apple moves away from notebooks like the MacBook Air and toward a professional-tablet option.

It's not all bad, but not good either
Even if this scenario plays out like we've mentioned, it's still not all doom and gloom for Intel. The company already has its chips in Microsoft's Surface tablets and also Android tablets like the Samsung Galaxy Tab 3. Intel is expected to make more inroads into the Android tablet market this year, as it releases a 64-bit Atom processor for Android devices. Transitioning to more Android tablets will obviously give Intel the opportunity to further benefit from mobile's growth.

Though Intel's stock has been faring pretty well over the past year, its ties to the PC industry will continue to prove troublesome for investors if it can't transition to mobile quickly enough. A recent report from IDC said that despite new PC innovations like touchscreens, "there's still a still a high probability that we will see another decline in worldwide shipments in 2014."

Intel investors should keep an eye out for how the company is working to sell more chips for Android devices, as well as any news on an iPad Pro. While Intel is still the largest microprocessor company in the world, mobile-device makers rely heavily on ARM architecture, and that doesn't seem to be changing. If Apple launches an iPad Pro that takes on the enterprise-notebook market, Intel could lose even more footing in the mobile space.

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Read/Post Comments (4) | Recommend This Article (1)

Comments from our Foolish Readers

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  • Report this Comment On January 03, 2014, at 9:57 PM, enginear wrote:

    I agree with everything here... that said, I have to throw in my 2 cents about INTC's (and the desktop's) future. (Keep in mind that this is just the opinion of someone that has been wrong many times.)

    It ain't dead, and it ain't dying. Yes mobile will eat some of that market up (already has), but it will be a long time before the mobile devices are the ones we use for our 'work' (whether at home or a job). Of course some of that will even be done on mobile devices, I just don't see that most of it will.

    Tablets and 'phones' are useful while moving about, but when I get home, I sit at the desk and turn on the (big clunky - desk or laptop) computer. I like the big monitor, the big keyboard, the DVD, the laser printer, the ability to connect it to any device available. I know I'll never leave it at Starbucks, or drop it on the floor and break it (at least I hope not!).

    And workstations on the job... well, I think that's all I need to say (for quite some time anyway).

    Intel wasn't first off the mark when mobile devices reared its (ugly, beautiful, otherwise... you choose) head, but neither were they absolutely asleep (think Microsoft when the internet burst forth). They do have a lot of competition they didn't used to have, but the microprocessor market is finally getting to be a bit long in the tooth, and they couldn't have it all to themselves forever. They've done reasonably well for a giant corporate behemoth.

  • Report this Comment On January 03, 2014, at 11:07 PM, guest1 wrote:

    Let me know when the iPad pro can run real productivity programs. If AAPL had any brains it would go put the INTC chips into their iPad form factor so they can run their full mac OS giving their users access to real productivity software like Office. My Win 8 Dell tablet can run full windows and legacy windows programs while having equivalent battery life to the iPad. That alone will prevent AAPL from dominating the enterprise market. Most firms that have adopted the iPad have realized that it is of limited utility since it can't run any of the other programs that they invested a ton of money into.

  • Report this Comment On January 04, 2014, at 12:20 AM, techy46 wrote:

    Oh come on bring it on! Intel's not afraid of Apple's A7 since Intel's Atom Bay Trail. the least powerful Intel PC chip, already matches the A7 in performance and low wattage. In fact, I'll put my new Asus T100 Bay trail 2-in-1 notebook tablet up against most i3 3rd gen notebooks and any iPad.

  • Report this Comment On January 04, 2014, at 7:15 PM, jimbeama wrote:

    "This would hit Intel in an area of strength -- enterprise NBs -- and open up the monopoly to price competition, a common theme for Intel in 2014."

    Ok, a quote of a quote. I saw this in another article, probably the original but failed to make this comment until now.

    Enterprise notebooks...You don't see much in the way of apple products in the enterprise now with macbook pro/air. Why would an apple 2:1 all of a sudden be encroaching in the enterprise with something that likely is not that good for work.

    Second, price competition. Apple products are more expensive than comparable non-apple products. Where is the price competition coming from? Apple? I think not. If by chance they go the wintel route for 2:1 and use their MacOS rather than iOS then they should use the more powerful CPU from Intel.

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Chris Neiger

Chris has covered Tech and Telecom companies for The Motley Fool since 2012. Follow him on Twitter for the latest tech stock coverage.

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