Apple’s tablet business about to take a hit, says analyst

Nov 13, 2014 10:56 GMT  ·  By

KGI Securities is home to one of the most prominent Apple analysts that you’ll hear about in the media. The informant, so to speak, has concluded the latest research on Apple’s tablet business and where it’s headed. He has good news and bad news to share with investors, company watchers, and customers alike.

Ming Chi Kuo of KGI Securities makes a habit of visiting Apple’s suppliers in the Far East from time to time to tap the company’s plans for future device rollouts. More often than not, he’s accurate in his reporting. Here’s what he’s found this time around.

iPad Pro is still on the way

Although pushed a little off schedule, the rumored iPad Pro featuring a 12+ inch display is still on the roadmap for 2015, only it won’t be released in Q1. Instead, Apple will launch the bigger tablet in the second quarter.

The reason is directly tied to the manufacturing hurdles incurred by Apple’s partners in China. The company is said to have adopted new display technologies, an ultra-slim chassis, and other stuff that makes production more difficult than before. The Cupertino giant currently sells two different iPad models, one boasting a 9.7-inch display, the other sporting a smaller 7.9-inch screen.

Kuo says that he’s learned that the iPad Pro will use an oxide panel which enables “high resolution, quick response, and high color saturation.” Yield rates would also pose a major problem, he said in a research note to investors this week.

Declining iPad shipments

Apple will post some of its worst iPad numbers soon, according to the KGI analyst. Because of lack of new applications, tablet market saturation and a typically slow season, “we forecast iPad shipments will fall 54.5% QoQ to 9.8mn units in 1Q15,” he reports.

Kuo then elaborates, “We believe that, in a major shift, while Apple (US) used to be able to use new form factor designs to boost demand, it has failed to do so this time around. The lighter and thinner iPad Air 2 will face strong headwinds in increasing sales in 1Q15, we believe; we also hold that this means that iPad, along with the entire tablet market, is faced with structural challenges characterized by a lack of new applications and market saturation. We don't think these challenges will be easily overcome by upgraded specs, new form factor designs or lower prices.”

Apple’s first new iPad likely wouldn’t have been announced any sooner than late-Q1 or early Q2 anyway, because the company typically doesn’t schedule events any sooner than March of every year.

iPad Pro gallery (4 Images)

iPad Pro mockup
iPad Pro mockup next to existing modelsAnother iPad Pro concept next to existing iPads
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