The iPad roared to life with then-CEO Steve Jobs positioning the device as somewhere between a tablet and a laptop -- and to great success. However, it was never the primary device that the iPhone remains. Looked at as a stand-alone entity, the Apple (NASDAQ:AAPL) iPad division alone could still easily garner a market cap in the tens of billions of dollars.
However, more recently, shipments have slumped, as Apple's larger iPhones syphon off demand for its smaller tablets, among other things. However, investors believe Apple also has a potential antidote for its ailing iPad division in the form of a larger-screened iPad, and a recent analyst note only reinforces that point.
Apple iPad rumors revealed
The idea of a screen larger than the current 9.7-inch iPad Air 2 first surfaced in 2013, according to the MacRumor page dedicated to the device -- which is, in itself, a remarkable statement about this emerging storyline. However, given the iPad's sagging sales as of late, the notion that Apple might engage in a bold product move to revive the segment makes perfect sense. To that point, Taiwan-based research analyst Ming-Chi Kuo of KGI Securities recently penned an investor note claiming detailed knowledge of Apple's production plans for the so-called iPad Pro.
Before delving into the specifics, recall that Kuo's past predictions include both accurate and inaccurate calls on the future course of Apple's product portfolio. A reader should always be cautious with any analyst's predictions. However, the consensus regarding the Pro extends well beyond Kuo at this point, which helps bolster the likely veracity of her claim.
Kuo's analysis centers around two purportedly marquee features for the iPad Pro. First, Kuo argues that the iPad Pro will, for the first time, support a Bluetooth stylus. A whole host of iPad styli already exist, but this would be the first version supplied directly by the company
Kuo claims that Apple plans to order roughly one million styli during its first production run. A stylus might prove useful in an entperprise-driven iPad. Microsoft included its Surface Pen with the Surface Pro 3, which has proven the most successful of Microsoft's tablet offerings yet.
Clearly, a market exists for a stylus, and Apple also tends to understand its users quite well. It's hard to gauge exactly what including an Apple-branded stylus might do for iPad sales, but this would mark a drastic shift from the thinking of Steve Jobs, who famously detested the accessory.
Also, Kuo states Apple will include Force Touch, its ultra-sensitive touchscreen interaction technology, with the iPad Pro. Apple typically includes some kind of standout technology into its even-fiscal-year iPhones as a means of differentiating them from their immediate predecessors, which usually share identical form factors.
In recent months, multiple sources have claimed Apple plans to use Force Touch to this end, which also strongly implies next year's entire suite of iPhones and iPads will feature Force Touch. But will these be enough to revive iPad sales?
Apple's most enterprising iPad yet?
Apple has long viewed the enterprise space as a huge area of opportunity for the iPad, and the larger iPad Pro will assuredly target this massive market. During the past several years, Apple struck a number of deals with various enterprise software vendors, most notably IBM, to help Apple develop various business-related apps as a means of creating demand for the iPad.
More software and a larger screen should help bolster iPad sales, but they are unlikely to reinvigorate iPad sales alone. Market researcher Forrester notes that the bulk of new tablet demand currently comes from the corporate space.
However, annual aggregate tablet unit sales will only increase from about 218 million devices this year to 250 million in 2018, or about 15% annually. There's also the lingering possibility that Apple's iPad Pro shipments might cannibalize sales of other Apple products from its Mac lineup, which has undergone a surprising renaissance in recent years amid a struggling PC market.
More importantly, the apparent natural limitations of the tablet market appear to be a far greater constraint on Apple's tablet business overall. This larger iPad storyline will likely gain momentum as we near Apple's fall product launch window. However, as this discussion increases, Apple and tech investors need to remain keenly aware that the fate of Apple's tablet business will probably be determined largely by forces outside the tech giant's control.