Apple's (Nasdaq: AAPL) new iPad is going to be a hit.
There's no point denying the addictive tablet's allure. I dare anyone to defy Apple's claim that 2011 will be the year of iPad 2.
Investors may as well begin lining up behind the victors. The obvious winners will be Apple and the component makers that have earned a right to be part of the iPad 2 guts. Let's take this one step further by going over some of the more surprising companies that stand to benefit from Apple's new release.
Best Buy (NYSE: BBY)
I was one of the biggest critics of Best Buy's new obsolescence protection insurance. Even the clever ad starring Ozzy Osbourne and Justin Bieber didn't sway me. Who would pay an extra $40 to $350 on new tech gadgets for the opportunity to sell it back to Best Buy for 20% to 50% over the next two years?
Using Apple's iPad as a pricing example, someone would pay an extra $70 on the $500 entry-level iPad 2. If they return it within six months, they would get $250 back. It's a sliding scale down to $100 within two years. Back out the $70 paid upfront, and we're really talking about $180 back within six months or just $30 during the latter half of the second year. It remains a ridiculously bad proposition, even though the cruel math gets kinder on higher-end tablets.
However, Apple is helping Best Buy here -- and not just because the consumer electronics chain will be stocking the iPad 2 for next week's launch. Apple is a company that has spoiled its fans with annual refreshes of its product lines. By introducing the iPad 2 just 11 months after the original's debut, consumers may begin to think that the class of Cupertino is accelerating its refreshes. There are even rumors out there that the iPad 3 may be out later this year!
All of this naturally plays right into the obsolescence fears that Best Buy is hoping to cash in on with this high-margin add-on.
eBay (Nasdaq: EBAY)
Apple's new iPad -- and the smart decision to mark down the remaining first-gen models by $100 -- will create a buyer's market for secondhand tablets.
Hello, eBay!
There were more than 57,000 items listed on eBay this morning under the "iPad" search query. Between folks looking to unload their older iPads and those seeking huge markdowns on used ones, eBay's going to be a hotbed of tablet swapping in the coming weeks.
Google (Nasdaq: GOOG)
How can the influx of more iOS gadgetry help the tech titan championing the rival Android platform?
Well, there are several ways that Google comes out winning here. It remains the world's leading online advertising platform, and more Web-surfing tablets can only help. However, let's focus on the iPad 2's role in beefing up Google's YouTube.
The world's most popular video-sharing site is a built-in app on iPads, iPhones, and iPod touch devices. It's obviously going to be a fixture on the iPad 2.
So what?
Well, unlike the original iPad, the iPad 2 comes with cameras, including a rear-facing lens that shoots high-def video. How much of that is going to wind up on YouTube? A lot. Most of the uploads will generate few views, but it won't be long before a viral video or two hits YouTube because the iPad 2's camera was convenient.
Shutterfly (Nasdaq: SFLY)
Let's stick with the dual cameras. They won't just shoot video. Obviously a lot of snapshots will be taken, regardless of the awkward form factor.
Digital photography would seem to be the death knell of photofinishing. Who develops snapshots when folks can share personal photographs through social networks, email, and photo-sharing websites?
Well, Shutterfly is living proof that digital shutterbugs are good for business. Revenue and earnings soared 27% and 35%, respectively, during its holiday quarter. More digital cameras out there will translate into more orders for photo books and its growing line of customized wares.
Verizon (NYSE: VZ)
In a "do it yourself" approach to making the original iPad work on its network, Verizon Wireless began selling Wi-Fi iPads bundled with Novatel Wireless (Nasdaq: NVTL) MiFi mobile hotspots to duplicate the 3G experience.
It won't have to do this anymore.
Two months ago, Verizon's CFO promised that there would eventually be iPads with internal connectivity to Verizon Wireless' popular network. Well, that's exactly what will happen with next week's iPad 2 rollout.
Can you iPad me now without a dual gadgetry workaround? Yes.
What other winners are you eyeing with next week's iPad 2 debut? Share your thoughts in the comment box below.
