Apple Fans Get New iPad, Many Upgrading From iPad 1

By PATRICK SEITZ, INVESTOR’S BUSINESS DAILY

Apple (AAPL) fans lined up outside retail stores Friday to get their hands on the company’s third-generation iPad tablet computer.
By at least one analyst’s count, lines were far shorter this time.
And many shoppers were upgrading to the new device from Apple’s original iPad, having skipped the intermediate iPad 2 release last year.

“I’m upgrading,” said Tanja Brandt of Potomac Falls, Va. “I sold my first iPad so I could get this one.”
Brandt was one of about 200 people lined up outside the Apple store in Reston, Va., early Friday.
She was getting the pricier model iPad with high-speed 4G LTE wireless connectivity so she can connect to the Internet anywhere.
“My iPad will go wherever I go,” she said. “I have all my addresses, contacts, calendar, email, games, books, music and movies on it.” Her son Connor, 18, also was getting a new iPad on Friday. For him, it was a choice between getting a used car or a shiny, new iPad.

Fordham University student Robby Abiera, 23, drove about five hours from New York City to Reston with some friends and waited in line four hours to get the new iPad. That was preferable to waiting a couple of days in line at an Apple store in New York, he said. Abiera had the original iPad, which was for personal use and schoolwork.

Supplies of the new iPad, which many are calling the iPad 3, are expected to be tight for several weeks. Apple’s website says orders for the new iPad will ship in two to three weeks. “It’s not much of a surprise that you’re seeing all these lines globally,” said Sterne Agee analyst Shaw Wu. “It’s an event. It’s like a ‘Star Wars’ movie. It’s a cultural event not just in the U.S., but globally.” Apple likely will sell 2 million to 3 million new model iPads in the next two weeks, Wu says. He expects Apple to sell 10 million total iPads this quarter.

The iPad 2 launched on March 11, 2011. Apple later said it sold 4.7 million iPads in the quarter ended March 26, 2011, but that it could have sold more except for supply constraints. That might again be the case. Lower-priced iPad 2 tablets will help boost sales near term, Wu point outs. “The iPad 2 is actually selling pretty well,” he said. Apple’s older iPad 2 tablets are available for $100 less than before, starting at $399. Meanwhile, the new iPad is priced starting at $499 for a Wi-Fi only model with 16 gigabytes of storage.

Apple still largely has the tablet market to itself, says ISI Group analyst Brian Marshall. “From a competitive perspective, it’s pretty smooth sailing for Apple,” he said.
In full-featured tablets, Apple’s biggest competitor is Samsung’s Galaxy Tab, which runs Google’s (GOOG) Android operating system. Amazon.com (AMZN) also competes with the iPad, but its offering — the Kindle Fire — is a stripped-down, small-screen Android tablet. The Kindle Fire has a 7-inch display and sells for $199.
Marshall predicts that iPads will account for 60 million of the 90 million tablets sold this year.

Yet the newness of the iPad seems to have worn off. Hudson Square analyst Daniel Ernst reported Friday that lines for the new tablet were more than 75% shorter than the crowds that gathered for the launch of the iPad 2 a year ago. His observation was based on lines outside five retail locations in Connecticut and New York. “All but three of the people we spoke with already owned an iPad,” Ernst wrote in a research note. “During our iPad 2 survey last year we found 69% of our 80 respondents did not already have the iPad 1.”

The new iPad features an ultrahigh-resolution Retina display for razor-sharp text and crisp photos and video. The 9.7-inch display delivers four times the number of pixels as the current iPad 2. The third-generation iPad also has a faster processor with better graphics, improved camera, high-definition video recording, and voice dictation, with the same battery life as the current iPad 2. Battery life is one area competitors will have a tough time matching, Wu says. Apple was able to keep battery life the same because it uses its own chips, software and battery chemistry, he says. And 4G wireless is a notorious battery hog, he says.

Apple had sold 55.3 million iPads as of Dec. 31. It sold 15.4 million iPads Q4 alone. The original iPad debuted in April 2010.

After reaching a new high of 600.01 Thursday, Apple shares have retreated. The stock rose a fraction Friday to 585.57.

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