iPad 2 Available Next WeekBy Reuters | Print
Apple CEO Steve Jobs, who has been on medical leave since January, unveiled the thinner, faster iPad 2. Analysts say that at the price, which starts at $499, iPad 2 is still the tablet to beat.
The iPad 2 goes on sale at AT&T Inc and Verizon Wireless , and at $499 is about $100 cheaper than Motorola Mobility's Xoom. Its shares slid 4 percent.
Avian Securities analyst Matthew Thornton said Motorola investors were concerned by both its earlier-than-expected release and its still-aggressive pricing.
"The hardware is as good as anything on the market, the price is still very aggressive, and the software just buries the competition," said Gartner analyst Van Baker. "They're still the guys to beat by a large margin."
"This does serious damage to the competitors in the market. Xoom now looks like an extraordinarily expensive tablet, and the HP tablet looks under-featured."
Apple sold nearly 15 million iPads in nine months of 2010, two or three times as many as analysts had predicted. The company is expected to sell 30 million or more this year, which would generate close to $20 billion in sales.
That is despite a growing cast of competitors such as Motorola, Research in Motion and Hewlett-Packard Co .
Shares of Cupertino, California-based Apple rose 0.8 percent to close at $352.1 on Nasdaq. It held steady in after-hours trade.
"It's pretty positive. It's definitely a sign that he's in good enough health," said Vijay Rakesh at Sterne Agee.
Tablets are seen as a must-have device for consumers and many businesses over the next few years. Analysts expect the market to surge to more than 50 million units this year, and 200 million units by 2015.
As in the smartphone market, Apple's chief rival is expected to be Google Inc's Android platform, which is free to license and is being used on a number of tablets.
The iPad, along with the iPhone, is expected to fuel Apple's growth over the next several years. The two product lines already make up more than half the company's revenue.
Apple's products tend to be priced at a premium to its rivals, but the iPad has been priced aggressively low versus the competition, both to dominate the market and because the company can leverage its own retail network and pre-bought manufacturing capacity.
That has pinched the company's margins, a problem Apple
seems happy to live with if the tablet can deliver such
A longer-term problem might be the question of who might replace Jobs were he to step down -- Cook is the favorite for the top job and has been running Apple in his boss's absence.
But for now, concerns that Jobs might have to exit -- stirred by sensationalist and unsubstantiated tabloid reports -- appear to be allayed by Wednesday's proceedings.
"Investors know his illness is pretty serious, but it's comforting to know that while he's in his supposed leave of absence, he's still involved," said Capital Advisors Growth Fund co-manager Channing Smith. "The new product looks good and the key is they continue to innovate, which is what we want to watch rather than looking at Steve Jobs." (Writing by Edwin Chan; Additional reporting by Bill Rigby in Seattle, Sinead Carew and Liana B. Baker in New York, Noel Randewich and Braden Reddall in San Francisco; Editing by Richard Chang)