Apple (NASDAQ:AAPL) plans to release several new products this year, according to the company's CEO, Tim Cook. Not just next-generation Macs, iPhones, and iPads, but completely new products in totally new categories.
Based on reports from Apple's supply chain, and the company's own product nomenclature, one of those products could be a larger iPad. This rumored "iPad Pro" (which many sell-side analysts have said is forthcoming) allegedly would've sported a 12.9-inch screen. Aimed at enterprise users, it could've competed with Samsung's (NASDAQOTH:SSNLF) Galaxy NotePRO 12.2, and may have put pressure on Intel (NASDAQ:INTC).
But according to DigiTimes, the iPad Pro isn't coming. The Taiwanese outlet, which has a fairly good track record, has said Apple cancelled the project. If so, it's a good a development for Intel, but it doesn't bode particularly well for Apple or Samsung, as both companies look to expand their tablet dominance.
How big is too big?
The Motley Fool's own Evan Niu was at CES when Samsung unveiled the Galaxy NotePRO 12.2 back in January, and he got a chance to test out the device. Unfortunately for Samsung, Evan found it too big and unwieldy and ultimately concluded that no matter the manufacturer -- Apple or Samsung -- larger tablets were unlikely to succeed.
If DigiTimes is correct, Apple executives have come to a similar conclusion. Finding little support among developers, Apple has killed the iPad Pro, while sales of Samsung's Galaxy NotePRO 12.2 languish. DigiTimes expects Samsung to sell just 1 million Galaxy NotePROs in 2014 -- if so, it will represent just a tiny fraction of Samsung's total tablet sales (it sold more than 40 million tablets in 2013).
If Apple has cancelled the iPad Pro, investors may have to temper their expectations for the company going forward. While the iPhone remains Apple's core product, and other products including a smart TV and smartwatch are widely anticipated, a number of analysts have cited the iPad Pro as a reason to own Apple shares.
Wedge Partner's Brian Blair, in a note last week (via Barron's), said that a forthcoming iPad Convertible with a 12-inch screen would help Apple shares rise as much as 20% in the coming months. Analysts at Evercore Partners have even more explicit, predicting that a forthcoming 12-inch, enterprise-focused iPad would allow Apple to "transform the traditional notebook market."
Pressuring traditional PCs
Evercore analysts went on to argue that a larger iPad would pose a challenge to Intel -- presumably sporting Apple's own A8 mobile chip, an iPad Pro would eat into the market for Intel's processors. With a larger screen, an iPad Pro lwould've been sold as a notebook alternative. If Apple had successfully persuaded buyers to opt for its iPad Pro in place of a traditional notebook, Intel's revenue would have declined, as the company's chips power the vast majority of notebooks on the market.
But if Apple has cancelled the product, and Samsung is struggling to succeed, Intel can rest easy, knowing that's core market won't vanish overnight. While the market for traditional PCs contracted in 2013, and is expected to continue to decline in the coming years, the success of larger tablets could've accelerated that process significantly.
That isn't to say that Apple investors have nothing else to look forward to -- or that Samsung's tablet business is hosed. But the apparent failure of 12-inch-plus tablets suggests there are limits to mobile computing.
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Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Apple and Intel. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.