Why a 12.9-Inch iPad Is in Apple's Future

1 - Why a 12.9-Inch iPad Is in Apple's Future
2 - Current iPad Sales Are Down
3 - The Competition Is Going Bigger
4 - Tablet Competition With Notebooks Intensifying
5 - Apple Might Be Able to Improve Market Use Cases
6 - Apple Is Concerned About Cannibalization
7 - Apple Is Willing to Go the 'Family Route'
8 - Analyst: 'Users Are Passionate About Their Screen Size'
9 - Consider the 'Pairing' Dynamic
10 - Apple's Tablet Innovation Has Been Somewhat Sluggish
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Why a 12.9-Inch iPad Is in Apple's Future

by Don Reisinger

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Current iPad Sales Are Down

Apple is having a little bit of trouble improving sales of its iPad. The company reported its fiscal third-quarter earnings recently and revealed that while it sold 13.3 million iPads worldwide, that was down from the 16.4 million it sold in the previous quarter and the 14.6 million units it sold in the fiscal third quarter of 2013. That 9 percent drop in unit sales translated to an 8 percent drop in revenue. Apple needs something to jump-start its iPad business, and maybe a bigger screen will do it.

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The Competition Is Going Bigger

The competition is going bigger on screen sizes in the tablet market. Whether it's Microsoft, LG, Samsung or others, a number of companies are offering tablets that range in size from 10 inches all the way up to nearly 13. While 10 inches isn't a major jump over the 9.7-inch iPad Air, it's big enough to make a difference to some. And, surprisingly to some customers, Apple needs to catch up.

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Tablet Competition With Notebooks Intensifying

As tablet sales have fallen, lower-end notebooks are starting to gain some ground. Part of that is due to pricing, but it's also due to the value customers are finding in the slightly larger screens, according to some analysts. If notebooks are starting to pressure iPad sales, Apple needs to respond. And maybe that means delivering a larger display.

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Apple Might Be Able to Improve Market Use Cases

While Apple has been making significant inroads into the enterprise, bringing to the market a bigger screen might allow it to affect other spaces. For example, the medical field has been somewhat reluctant to adopt new iPads because of the smaller screens, according to Piper Jaffray analyst Gene Munster. By bringing about a new iPad, Apple might be able to attract that core market and extend its tablet's use in other industries. For Apple, it's all about stretching its reach as far as possible.

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Apple Is Concerned About Cannibalization

Apple might be concerned about cannibalization. The iPad Mini, which has a 7.9-inch screen, sits comfortably between the bigger iPad Air and the 4-inch iPhone 5S, but it's also quite cheap. And for some customers, opting for the smaller tablet and saving money is a desirable purchase option rather than investing hundreds of dollars more in a device that has a screen that's less than two inches bigger. A 12.9-inch tablet brings greater contrast to the differences between the iPad Mini and the larger iPad, which perhaps makes buying decisions easier.

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Apple Is Willing to Go the 'Family Route'

One of the key aspects of Apple's business has always been to get customers to buy into its "family" of devices. That means owning an iPhone, an iPod and an iPad, and maybe even picking up a Mac. By launching a larger iPad, Apple could perhaps increase the number of uses for its products and find ways for individuals to buy perhaps more than one iPad, depending on use. The iPad with the 12.9-inch screen would be for work, while the iPad Air or iPad Mini would suffice for home and travel. Increasing investment in iPads should be central to Apple's thinking if it plans on launching a bigger iPad.

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Analyst: 'Users Are Passionate About Their Screen Size'

Speaking to Bloomberg in a recent interview, analyst Gene Munster made a very revealing statement: "Users are passionate about their screen size." He said that his firm Piper Jaffray has performed surveys of customers and found that there is a real desire for larger screens, and Apple has yet to fill that void. If Apple does fill that void, Munster argues, Apple could see sales jump.

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Consider the 'Pairing' Dynamic

In that same interview with Bloomberg, Munster discussed the so-called "paring" phenomenon that he's seeing in the marketplace. He said that by launching a larger iPad, it's possible that Apple could make the argument a bit more strongly that if you own the highest-end iPad, you should also be buying an iPhone or a high-end Mac. Apple is starting to make that push by doing a better job of integrating iOS and OS X, but it'll be the hardware, Munster argues, that will ultimately create the "pairing" dynamic for the company.

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Apple's Tablet Innovation Has Been Somewhat Sluggish

Let's face it: Apple has kept its tablet innovation to a minimum. The company was content with its 9.7-inch iPad until it was forced to go small when minimalism took over and the iPad Mini became a necessity. Since then, Apple has kept the same screen size and offered iterative updates to its slates. The time has again come for Apple to make a move and be more innovative. Offering a device with a larger screen is precisely what it needs.

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