* New LTE-capable iPad expected-source
* New iPad may popularize faster networks of AT&T, Verizon
SAN FRANCISCO/NEW YORK, March 6 (Reuters) – Apple Inc
(AAPL.O) is betting a 4G-equipped iPad will tempt more U.S.
consumers to pay extra to watch high-quality video on the go,
and in turn, give Verizon Wireless and AT&T Inc (T.N) a revenue
Until now, Apple’s fan legion has been reluctant to shell
out extra money even for iPads with 3G connections. The cheaper
Wi-Fi-only model — with more limited Web access — is by far
the top-selling one today.
The newest iPad will be capable of operating on a high-speed
4G “LTE,” or Long-Term Evolution network, according to a source
familiar with the product. At speeds roughly 10 times faster
than current 3G technology, that may go a long way toward
banishing the sometimes shaky video quality of older devices.
Such a juiced-up device would help boost the telecoms market
if consumers catch on and can be enticed to pay more, some
analysts said. The global tablet user base already reached 67
million in 2011, according to researcher Strategy Analytics.
“It’s going to dramatically improve video consumption,” said
UBS analyst John Hodulik. “This is the device people want. They
want the fastest speed. They want high resolution.”
Apple, AT&T and Verizon declined to comment.
The Cupertino, California-based consumer device company is
gearing up to unveil the iPad 3 on Wednesday, a faster and
better-equipped version intended to thwart increasing
competition from rivals such as Samsung Electronics Co
(005930.KS) and Amazon.com (AMZN.O).
The new iPad will be “critical” to Apple if it is to
continue to dominate the global tablet market, said Frost &
Sullivan’s analyst, Phil Harpur.
“A lot will depend how receptive the market is to the new
features offered by iPad 3, two of which are believed to be
quad-core processing and 4G-LTE capabilities,” he said. “While
iPad 2 offered only minor incremental upgrades, this time the
market will be expecting a lot more.”
The unveiling at the Yerba Buena Center for the Arts in San
Francisco, where the company also introduced the last two iPad
generations, will be Chief Executive Tim Cook’s second major
product launch, after the iPhone 4S unveiling last year at the
The smartphone was initially a disappointment as
it was perceived to be mostly a software upgrade, but “Siri,”
its voice-enabled personal assistant technology, helped to make
it a bestseller.
Cook will again be flanked by Apple’s top cadres on
Wednesday, when he kicks off a typically tightly choreographed
show scrutinized by investors and industry insiders. On hand
will likely be Apple’s top marketing executive Phil Schiller,
its head of Internet services Eddy Cue and software chief Scott
Forstall — the standard cast for major launches following the
death of founder and consummate showman Steve Jobs last year.
UPGRADE TO APPLE TV IN WORKS?
The company, legendary for keeping its agenda under wraps,
has not said what it plans to reveal but invited speculation
with its cryptic event invitation, graced by a partial image of
an iPad screen and the tagline: “We have something you really
have to see. And touch.”
Some predict an upgrade of the Apple TV, one of the rare
company products that has not seen mass adoption.
Jefferies analyst Peter Misek said the “see and touch”
reference was “very curious.”
“An upgrade of the Apple TV set-top-box is possible as well
as a remote chance for an iTV television set due to a reference
to a large screen size,” Misek said in a note to clients, adding
that it was possible that Apple could also announce an actual TV
despite not having a finished product.
Until then, it is the iPad 3′s 4G capabilities that may be
commanding the firmest speculation.
iPad sales doubled in the December quarter to 15.43 million
units. The company has sold about 55 million iPads since it was
introduced in 2010, and recorded more than $20 billion in sales
and related services and accessories in fiscal 2011.
But dozens of new devices are set to launch this year, so
Apple needs to stay a step ahead of its deep-pocketed rivals.
Handset makers including Samsung (005930.KS) and Motorola
Mobility (MMI.N) already have LTE-capable tablets available, so
in a way Apple is already late to the game.
The Samsung and Motorola tablets run on Google Inc’s
(GOOG.O) Android software, which is fast gaining ground on
Market share of Android-based tablets in the fourth quarter
rose to 39 percent from 29 percent a year ago, while the iPad’s
market share slipped to 58 percent from 68 percent, according to
Strategy Analytics analyst Neil Mawston.
But the early high-speed tablets have not caught on. They
accounted for a mere 1 percent of total tablet sales in 2011,
partly because they were expensive, Mawston said.
While Apple is not breaking new ground with LTE, it may play
a big hand in the technology’s take off on tablets, because of
the popularity of its iPad platform. The iPad 3 may also be
helped by recent expansion in the availability of LTE services,
according to Mawston.
Both Verizon and AT&T have been upgrading their networks
with LTE but since Verizon Wireless had a head start in rolling
out LTE — its first markets came on line in late 2010 — it
should have an advantage over AT&T, which launched its first LTE
markets last Summer.
Verizon’s LTE network covers markets with a population of
200 million while AT&T’s covers 74 million. Sprint Nextel (S.N),
the No. 3 U.S. operator, will offer LTE later this year.
One impediment to the success of the iPad 3 with the faster
connectivity could be rising data service charges.
Carriers charge customers for data on a per-usage basis,
which can quickly add up. For example, watching 30 minutes of
video a day on Verizon could add up to almost twice as much data
downloads as its monthly $30 service package provides for.
If people really like how the new device works, UBS’s
Hodulik said they may not mind the charges. Even if only 10
percent more iPad users bought the 4G instead of the Wi-Fi
version, it would help service providers, which do not subsidize
the price of the iPad, Macquarie analyst Kevin Smithen said.
“Generally it should be incremental revenue for
the carriers,” Smithen said.
So far the most popular version of the current iPad is the
cheapest — the one that works only on Wi-Fi, a short-range
wireless connection, and does not connect to service providers
networks. So it could still be an uphill task to convince most
buyers to pay for iPad services even with faster speeds.
“It’s very important for a decent size subset of the users,
probably somewhere in the 10 to 15 percent range,” Gartner
analyst Van Baker said. “For 85 to 90 percent of people, it’s
just not going to matter.”
(Additional reporting by Yinka Adegoke in New York, editing by
Edwin Chan and Maureen Bavdek)
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