On March 27, Apple (NASDAQ:AAPL), at an education-focused event, announced an update to the low-cost iPad model that it first debuted in March 2017. It will offer few key upgrades from the prior-generation device.
The biggest upgrade is the move from an A9 processor in the prior model to an A10 Fusion processor in the new one. The A10 Fusion chip offers 40% faster CPU performance and 50% greater graphics performance than the A9, which should improve users' experience with apps, the web, and 3D gaming.
Apple, likely in a bid to stimulate adoption of iPad in education, added Apple Pencil support to the new device. Although this takes away a potential selling point from the higher-end iPad Pro line (which, fortunately, remains differentiated by many other features), it should broaden the appeal of the entry-level iPad and should also stimulate sales of its $99 Apple Pencil accessory as the installed base of compatible iPads should rise substantially.
From an aesthetic perspective, it doesn't seem as the new iPad differs significantly from the prior-generation model, nor does it appear that Apple has made any particularly big leaps in camera capabilities (for example, the FaceTime HD camera can still only capture 1.2-megapixel resolution images).
All told, this looks like a good, if not entirely surprising, update to Apple's most popular iPad. Let's take a look at what this will mean for the iPad business.
Keeping the momentum going
Since Apple introduced the low-cost iPad, its iPad business has seen significant stabilization. During fiscal year 2017, overall iPad unit shipments dropped just 4% year over year, which was a dramatic slowdown from the 17% decline during fiscal year 2016.
Moreover, during the first quarter of fiscal year 2018, Apple reported that iPad unit shipments grew 6% year over year, a phenomenon likely attributable to the low-cost iPad.
Given that the last-generation low-cost iPad was successful in the marketplace, a newer, better version should be able to keep the momentum going. Moreover, the nice thing about this line of products is that Apple has an easy task ahead of it in putting together updated versions of the device year after year as it mainly includes components recycled from older-generation iPhones and, in some cases, iPads.
The next step
Apple's next task with respect to iPad will be to find ways to stimulate sales of its higher-end iPad Pro models. Apple didn't announce new iPad Pro tablets alongside the new low-cost iPad -- those are likely to come later this year -- but when those models do come out, the company is probably going to need to do more than a simple refresh of the internals.
The good news is that Apple is rumored to be moving to a new design for the upcoming iPad Pro models -- one that'll substantially reduce the bezels around the device thanks to the use of its TrueDepth 3D sensing camera technology for biometric authentication.
What Apple could introduce beyond the updated design, 3D sensing capability, and updated internal specifications, however, remains to be seen.
Ashraf Eassa has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.