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Apple Set to Unveil New iPads, as Rivals Are Gaining Ground

Apple Set to Unveil New iPads, as Rivals Are Gaining Ground

By Brian X. Chen, The New York Times | Updated: 16 October 2014 17:28 IST

Consumers around the world seem to have an endless appetite for new versions of Apple's iPhone. But that hearty taste hasn't extended lately to the company's other big i-product, the iPad.

After four years of dominating sales, the iPad is slipping against its peers. It is still the most popular tablet computer, but it faces tougher competition from tablets made by Amazon, Samsung and Lenovo.

Can an upgrade reverse that trend?

During an event at its Cupertino, California, headquarters on Thursday, Apple is set to unveil new iPads that are expected to include fingerprint sensors for each model. A major revision of the full-size tablet, the iPad Air, is also expected.

The new Air, which is Apple's larger and more expensive tablet, will be much thinner and faster than the current one, according to an Apple employee who spoke on the condition of anonymity because the plans were not yet official.

(Also see: iPad Air 2, iPad mini 3, New Macs, OS X Yosemite Expected at Apple Event)

The new iPads are also expected to include support for Apple Pay, the mobile payments system that Apple introduced last month for making purchases using the fingerprint sensor inside apps, rather than having to enter a credit card number. And for those looking for a new color, gold iPads will be added to the mix.

Apple may have leaked some of its own news on Wednesday. An iPad instruction manual, written by Apple, surfaced on iBooks, Apple's digital bookstore, with illustrations showing a new iPad Air and an iPad mini including fingerprint sensors and improved cameras. An Apple spokeswoman did not respond to a request for comment.

The iPad now has a 26.9 percent share of the global market, ahead of Samsung with 17.2 percent and Lenovo with 4.9 percent, according to the research firm IDC. But in the second quarter, Apple's iPad sales declined 9.3 percent compared with the same period a year ago, IDC said.

Part of the reason is that consumer interest in this kind of device - from any manufacturer - may also be waning. Shipments of tablets skyrocketed from 18 million in 2010 to 207 million last year, according to the industry analysis firm Gartner. But this year, Gartner predicts tablet shipments worldwide will be up 11 percent, a significant drop from a 55 percent increase in 2013.

"There were a certain number of people that were excited about tablets for a while," said Mika Kitagawa, an analyst for Gartner. "But it turned out that tablets after all are not really a great product for some things, especially productivity and work. So some people actually go back to the laptop."

Theories abound as to why sales of the iPad, in particular, are slowing. Mostly, though, Apple faces intense competition from companies offering tablets for lower costs. Some, like those sold by Micromax in India, cost as little as $50; Amazon's Kindle Fire can be had for as little as $100. Samsung Electronics offers tablets in different screen sizes at various prices, from the middle tier to the high end.

The cheaper tablets are "not really a comparison with iPad, but for those people who just want to do content consumption, those are good enough products," Kitagawa said.

Another trend hurting overall tablet sales, analysts say, is that smartphone screens just keep getting bigger. Big-screen phones, or so-called phablets - a blurring of the line between a phone and a tablet - appear to be eating away at sales of smaller tablets.

"When an opportunity arises to collapse a couple of categories together, that's attractive," said Jan Dawson, an independent telecom analyst for Jackdaw Research. "Some people who use a phablet will end up deciding to forgo a tablet, seeing one device as enough."

And for years, while tablet sales were on the rise, personal computers were taking a beating. But that started to change for some PC makers in the third quarter.

PC shipments over the last quarter fell roughly 1 percent, a notable improvement from the 10 percent drop in 2013. Analysts said businesses were buying PCs again partly because Microsoft discontinued support for an older version of Windows, called XP, which pushed many businesses to upgrade to new systems.

At the Cupertino event, Apple is also expected to show a new iMac with a sharper screen, and to give a release date for the next Mac operating system, OS X Yosemite, the Apple employee said.

Some moves Apple is making in the background could be even more important for the iPad than upgrades. In July, Apple announced a partnership with IBM to strengthen iPads and iPhones for use in businesses. The companies said they are working on more than 100 business software programs tailored for use in industries including retailing, health care, transportation, banking, insurance and telecommunications.

Shiny new iPads may sound more alluring, but improving business interest in the iPad is important to Apple. Chris Hazelton, a research director for 451 Research, said that among businesses, interest in using tablets has stagnated. In May, the company surveyed about 1,500 people involved with information technology spending in their companies, and found that 26 percent of respondents were planning to buy tablets for their organizations; that figure was also 26 percent in May 2013.

The partnership with IBM will probably accelerate development of apps for business use, beyond email and calendars. That could give businesses more incentive to buy large numbers of iPads for their employees, Hazelton said.

"The next kind of stage of innovation in this market is really going to be software-driven," Hazelton said. He added that banks and government agencies could make good use of Apple's fingerprint sensor as an extra security feature for gaining access to confidential materials inside iPad apps.

Inside Apple, another project aimed at professionals is an iPad with a jumbo screen, according to two employees who spoke on condition they not be named because the product is not yet finished, nor is it considered official yet.

In a recent interview about Apple's partnership with IBM, Timothy D. Cook, Apple's chief executive, acknowledged that while iPads and iPhones were used by over 92 percent of the Fortune Global 500 companies, there was still a vast, untapped market among other companies.

"The penetration is low, and the ceiling is so far above us it's unbelievable," Cook said.

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