For those following Apple (NASDAQ:AAPL) over the past year or two, there's probably no more divergent product lines than its iPhone and iPad. The former has registered three consecutive quarters of 50%-plus year-over-year revenue growth, on the back of successful iPhone 6 and iPhone 6 Plus iterations and continued demand from China. It has transitioned Apple from less of a diversified consumer electronics company to more of a pure-play iPhone company.
On the other hand, the iPad has noticeably struggled over the last year. For example, over the last four quarters Apple's iPad line has registered year-over-year revenue declines as the product has faced the double whammy of a maturing, slower-growth, and "good enough" market where fewer people are buying the product and are choosing cheaper replacements. For a visual representation of the iPad's struggles, see the chart below:
Many investors fear maturing markets as these conditions are generally negative for an individual company's revenue growth. But that's not always true -- there are many successful companies in mature markets that have differentiated and tailored their products to meet specific demand. According to in-the-know Apple analyst Ming Chi-Kuo, Apple's rumored iPad Pro unit is tailoring features to the business class.
Force Touch stylus support
According to the KGI Securities analyst, Apple's bringing functionality for an optional stylus to the new unit. The rumors on the 12.9-inch iPad Pro have always centered on its use for business, so adding support for the enhanced pen makes sense in an environment where signatures are often needed. In addition, Kuo claims Force Touch technology will come to the iPad Pro.
The Force Touch rumor makes perfect sense, considering the technology is already in Apple Watch, some versions of Apple's MacBook line, and is widely rumored to be the differentiating feature between the next-gen iPhone lineup and the current iPhone 6 one. Perhaps the most interesting function is the stylus appears to work with Force Touch technology, allowing the pen to delineate between light stylus markings and deep presses.
Let's talk sales and availability
Perhaps the most interesting disclosure, however, was Kuo's time frames and projected sales. He expects the tablet to go into production as early as next month with projected 2015 sales, presumably in Apple's fiscal first quarter, in the 4 million-5.5 million unit range, according to 9to5Mac. Assuming Kuo's midrange, 4.75 million units, iPad Pro sales would amount to over one-fifth of last year's corresponding unit sales.
It's important to note this probably won't result in an incremental 4.75 million units sold, however, as the iPad Pro sales should mostly replace/cannibalize other iPad sales, but this is still great for Apple's top line as the iPad Pro is widely expected to be more expensive than smaller iPad iterations.
More broadly, though, this shows Apple is working hard to differentiate a struggling product. The iPad Pro, alongside Apple's partnership with IBM, points toward a company designing a specific product for the enterprise and business class. After dominating enterprise tablet activations, Apple's recently seen its lead slip, it will be interesting to see the iPad Pro's effects on Apple's enterprise market share and for its struggling iPad business.