Apple Inc. is working with component suppliers and its assembler in Asia for the trial production of its next generation iPad from October, people familiar with the situation say, as it looks to stay ahead of the competition in the fast-growing tablet computer market.
The Cupertino, Calif., company has ordered key components such as display panels and chips for a new iPad it is aiming to launch in early 2012, said the people.
The next generation iPad is expected to feature a high resolution display - 2048 by 1536 compared with 1024 by 768 in the iPad 2 - and Apple's suppliers have already shipped small quantities of components for the sampling of the iPad 3. Suppliers said Apple has placed orders for a 9.7-inch screen device.
Apple spokeswoman Carolyn Wu in Beijing declined to comment.
One component supplier to Apple said the company has already placed orders for parts for about 1.5 million iPad 3s in the fourth quarter.
A spokesperson from one of the suppliers said.
"Suppliers will ramp up production and try to improve the yield rate for the new iPad in the fourth quarter before its official launch in early 2012."
Apple, like many other big personal-computer and consumer-electronics brands, doesn't actually make most of its products. It hires manufacturing specialists - mainly companies from Taiwan that have extensive operations in China - to assemble its gadgets based on Apple's designs. They use parts from other outside suppliers, many of which also are from Taiwan and elsewhere in Asia. The arrangement frees Apple and its fellow vendors from running complicated, labor-intensive production lines, while the ability of Taiwanese companies to slash manufacturing costs helps cut product prices over time.
Taiwan's Hon Hai Precision Industry Co. assembles the iPad. A company spokesman declined to comment.
Apple reported blowout earnings for its fiscal third quarter ended June 25 in part due to the popularity of its iPad. The company sold 9.3 million units in the quarter, nearly triple what it sold a year earlier. Together with the robust sales of the iPhone smartphone and other electronics devices, Apple's net profit for the period more than doubled to $7.31 billion from $3.25 billion a year earlier.
Still, the next-generation iPad would be coming at a time when there's more competition in the market. Companies from Samsung Electronics Co., Motorola Mobility Holdings Inc., ZTE Corp. and Toshiba Corp. have launched similar devices using Google Inc.'s Android software. Apple is also embroiled in several lawsuits spanning various countries with Samsung Electronics over alleged patent infringement.
COMMENTARY:
SELLING POWER OF THE IPAD
Yudu Media prepared the eye-opening infographic describing the massive selling power of the iPad.
[Click Image To Enlarge]
IPAD'S COMPETITION
There are close to 50 tablet computer makers, but only about five of them are worth a damn depending on your point of view. Here's a comparison chart of the top five against the iPad and iPad 2:
Since April 2010, Apple has shipped 28.7 million iPads and sold 9.25 million iPads in the second quarter 2011 alone. During the second quarter 2011 earnings call Apple reported that it had sold “every iPad that it could make”. That means that Apple has sold easily over 30 million iPads by now. 30 million. That means that Apple has sold ten times as many iPads as the three biggest competing devices combined have shipped, which is absolute shellacking and market domination.
To give you a second point of reference, iPad's key competitors of have most recently reported the following unit sales of their tablets:
- Motorola had shipped some 690,000 Xoom tablets.
- RIM had shipped 500,000 PlayBooks.
- Samsung reported shipments of 2 million Galaxy Tabs but has since ceased reporting any shipment numbers for fear that it might affect its ability to compete.
- HP stopped sales of the Touchpad after miserable results.
A DECADE OF TABLET DOMINANCE
According to Goldman Sachs, the Apple iPad line will dominate the consumer tablet market for years and will make Apple one of ther world's largest PC and tablet producers.
In a recent report, Needham analyst Charlie Wolf sees the iPad’s share of consumer tablet shipments declining gradually over the next nine years to 60% in 2020. 60%, of course, is still an overwhelming share of the market. Future tablets are more likely to steal market share from each other rather than from the iPad, the analyst explains, noting that competitive offerings to date have been greeted by consumers with “a yawn and lackluster sales.” Wolf sees iPad shipments reaching 35.61 million units in 2011, up 137.4% from last year and representing 85% of all tablets shipped. In 2012, iPad shipments will grow to 54.3 million units according to Wolf’s model, and shipments will hit 72.66 million units in 2013. The analyst sees iPad shipments reaching nearly 140 million units in 2020, representing 60% of all tablets shipped that year and accounting for $53 billion in revenue and $16 billion in profit despite an average selling price that will have dropped to $377 from $630 in 2010. Wolf’s 10-year iPad projections follow below.
[Click Table To Enlarge]
That's some scary shit isn't it? And, the iPad really isn't the best tablet on the market today. It has inferior screen resolution, doesn't handle multi-tasking as well as other competitors, and for Pete's sake it doesn't even support Adobe Flash. In spite of these shortcomings, it is kicking ass and taking no prisoners.
IT'S THE APPS, STUPID
When considering all of the “iPad killer” tablets, it makes you wonder what makes one tablet better than another. The answer is the apps. In June 2011, App Store reported that the iPad has more than 100,000 apps.
In June 30, 2011, the number of apps written or adapted for Apple's iPad hit the 100,000 mark. Within a few days MacStories' Frederico Viticci noted that the number iPad apps posted on the iPad's App Store had grown to 100,161. 148 Apps' Jeff Scott, who keeps his own count, reported a total of 102,994 within a week after the Apple store reported its numbers. AppShopper, which uses a different counting algorithm, reported 6,005 more apps than Apple reported.
And how are the iPad's competitors doing? It's difficult to really say. A search of Google's Android Market after Apple reported it had 100,000 apps, turned up only about 1,200 free Android tablet apps and 145 paid, or roughly 1/75th as many as the iPad. That's only 1,345 Android tablet apps.
This is really a pretty incredible achievement for the iPad, for the developers, and even for Apple, and it stands as a strong testament to just how strong the iPad’s growth has been since it’s release in April 2010. Of course, with all of the competing tablets in the last year duking it out with the iPad, this milestone is even more of a victory when compared to the 50,000 Android tablet apps
Apps is what is driving the iPad's popularity and market dominance. From all appearances, the Apple iPad has also won the App War, if there ever was one. It certainly looks like developer's are shunning away from developing apps for the other tablet manufacturer's, and as long as this situation continues, Apple will be top dog for a long time. Now that's what I call "magical".
WHERE IS THE "IPAD-KILLER"?
I keep waiting in vane for an "iPad-Killer". I'm like the Jewish slaves and Moses waiting for the Messiah. The Laws of Marketing say that when a company completely dominates a market, the consumer ends up paying the price. If Apple continues to dominate the worldwide market for tablet computers, as consumers we can all expect to pay premium prices for the iPad. And this is exactly what has happened.
I thought the Motorola Xoom would be the "Ipad-Killer". Nope. When Samsung introduced the Galaxy Tab I thought here's the Messiah. Nope. RIM introduced the BlackBerry PlayBook. and I liked it a lot, but it failed to make the slightest dent in the iPad's market share. When the HP TouchPad came out, I rushed to try it out and just loved it, then it received all those rave reviews. I finally thought, this is the ONE. Nope. HP finally stopped selling its beautiful TouchPad. So far not a single tablet manufacturer has been able to step up to the plate. They are all a bunch of wimps.
THE DARK SIDE OF APPLE: THOSE CHINESE SWEAT SHOPS
In a blog post dated October 23, 2010, I profiled Foxconn International a unit of Hon Hai Precision Industry, which manufacture's the Apple iPhone and iPad. As it turns out, Foxconn is nothing short of a gulag or slave labor camp, where workers endure deplorable working conditions, long work days, strict production quotas, and live in dorms that smell like garbage that has driven over a dozen workers to commit suicide. Business Insider produced an excellent article about Foxconn.
I caught some flack over that article because I made it sound as if though I hated Apple and Steve Jobs. Nothing could be further from the truth. However, Apple's success is an excellent example of a large American company that has achieved huge success by outsourcing thousands of jobs overseas without having to face the consequences for its actions, while its foreign manufacturer's ignore workers' rights, exploit their workers and generally treat them like slaves. You would think a company like Apple, which prides itself on product quality, and voted one of America's best companies, would accept social responsibility and pick its foreign manufacturer's more carefully to avoid those kind of problems. Foxxconn still produces Apple's products.
Courtesy of an article dated August 19, 2011 appearing in The Wall Street Journal, an article dated August 8, 2011 appearing in BGR, an article dated August 14, 2011 appearing in TNW and an article dated June 30, 2011 appearing in CNN Money
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