After a couple of false starts, it has now become official. Apple will host its Spring event on April 20, ahead of the closing bell on Wall Street, when at least a new iPad Pro is expected to be announced. The Apple Maven will cover the event via live blog – stay tuned for more details.
Investors must be wondering whether the product launch will be meaningful to the investment thesis on Apple stock. Today, the Apple Maven discusses the possible implications of the Apple iPad event.
Apple’s online-only event is likely to be all about the iPad Pro, first and foremost. The new device is expected to feature a faster processor, as usual, and a high-definition mini-LED screen. I will be interested in seeing if the components shortage will cause any delay in availability out of the gate.
The Cupertino company could announce other products as well. With the launch of the M1 chip and new ARM-based architecture in 2020, at least one Mac model may also see a refresh this time. Anything associated with the 16-inch laptop would likely be more relevant for investors than a desktop update.
Lastly, but probably not less important, a new set of AirPods headphones could see the light of day. Arguably, Apple’s wearables segment presents better growth opportunities over the long term. It would be good news to see the company upgrade part of the portfolio this month.
The iPad opportunity
Apple’s tablet business represented nearly 9% of the company’s fiscal 2020 revenues, up from 7% in fiscal 2018. The sales increase in the past couple of years has been impressive, especially after I erroneously called iPads “the new iPods” in 2016, due to what I saw as lack of growth opportunities.
As 2021 progresses, the iPad will face increasingly tough comps. During the pandemic year, Apple’s tablet sales fell off a cliff in fiscal first and second periods. But revenues recovered strongly in the June, September and December quarters, rising at least 30% year-over-year in each period.
The new iPad Pro, if confirmed, will be another item in Apple’s toolbox that should help the Cupertino company overcome the high bar set in the second half of 2021. By the end of this month, I expect Apple to have a complete lineup of tablets that are no more than seven months old – although the future of the iPad mini remains a question mark.
I doubt that the iPad segment will be a game changer for Apple stock, the same way that the iPhone or new products in mixed reality and autonomous vehicles could be. But I believe it is important for Apple to keep the momentum going in the tablet business, taking advantage of trends in work-from-home and tablet-as-a-PC.
What new product would you be most excited to hear about, on April 20? I asked Twitter this question, and here are the answers:
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)