The coming months should in many ways prove a watershed period for the world's largest technology company -- Apple (NASDAQ:AAPL).
Not only will Apple introduce a new iPhone and an updated iPad, but it is also expected to unveil some kind of new product that many anticipate will usher the company into another period of growth and innovation.
The iPhone and Apple's upcoming new product lines have received the bulk of the consumer, media, and investor attention, and rightly so. However, Apple's iPad remains undoubtedly its second-most important profit center. And although it might be flying under the radar at the moment, the tech and investing community recently enjoyed a positive bit of news regarding the industry-leading tablet. Here's what you need to know.
Apple's iPad roars to life
Last week, a number of credible new sources including Bloomberg News and The Wall Street Journal reported that Apple's next generation of iPads had entered mass production with the company's East Asian manufacturing partners. This is to be expected as Apple has refreshed both its iPad and iPhone once annually in each successive fall since either product's introduction. However, this time is also different for Apple and its leading tablet.
Although some regard the tablet market as the fastest-growing device category ever, correctly to some extent, Apple's iPad sales have actually seen year-over-year shipments decline in each of its two most recently reported quarters. Nonetheless, there's good reason to think the struggles facing Apple's tablet business might melt away in the months ahead.
Plenty of reasons to be bullish on Apple's iPads
In the short term, the iPad should enjoy two key catalysts that tech analysts and consumers alike should observe carefully.
The first tablet tailwind should stem from Apple's recently inked deal with corporate information technology heavyweight IBM. The deal, which can be rehashed in greater detail here, calls for IBM to build and deploy more than 100 enterprise-class applications for the use over Apple's OS and devices. In terms of the innovation it will spur, this is unquestionably a software-centric deal for Apple and IBM. Yet adding an enterprise sales partner with IBM's brand cache, sales force depth, and installed customer base should have some accretive effect to Apple's iPad sales in the coming months. We'll have to wait for Apple's next earnings report and conference call to fully examine just how valuable this deal has proven, but I'm certainly optimistic it should prove a boon for the iPad.
The second short-term driver for the iPad will stem from the spate of discounts that Apple's current iPad Airs and iPad Minis will receive at the hands of the company's distribution partners. AT&T, one of Apple's most prominent hardware vendors, recently began offering a $200 discount on the iPad for customers who purchased an iPhone 5s or 5c on a full-price installment program. The intent here is unmistakable: AT&T is offering the discounts in hopes of clearing out its own inventory channels ahead of the release of Apple's new iPhone and iPad later this fall. Consumers tend to also delay purchasing smartphones and tablets to a degree during the calendar-year third quarter. However, the rise of these types of discounts could pull some tablet purchases forward into the current quarter.
These two factors, plus the general uptick the tech giant enjoys upon releasing updated editions of its hardware, unquestionably imply that Apple's tablet business should be moving on up in the quarters ahead, possibly even more than many realize at present. So while the upcoming launch of the next-generation will almost assuredly overshadow the iPad narrative for investors and consumers in the months ahead, there's also evidence to suggest that Apple's iPad business might prove more robust than many realize in short order.
Don't say you weren't told.
Andrew Tonner owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and International Business Machines. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.