The Apple Inc. (NASDAQ:AAPL) rumor mill never rests, and the newest rumbling is that the company is preparing to release a new iPad model in the near future. This particular rumor isn't exactly the most exciting one, but it still has some implications for investors.
More art than science 9to5Mac has caught wind that Apple Inc. (NASDAQ:AAPL) is about to add a new storage configuration to the fourth-generation iPad with Retina display and offer it with 128 GB of storage for the first time. Not only have developers begun noticing code in the newest build of iOS 6.1 pointing to such a device, but 9to5Mac's source at a "high-profile U.S. retailer" has also confirmed the move along with pricing information.
Following Apple Inc. (NASDAQ:AAPL)'s standard practice, it will charge an extra $100 for a bump up to the next storage configuration, which will result in this lineup.
|Model||16 GB||32 GB||64 GB||128 GB|
|iPad 4 with LTE||$629||$729||$829||$929*|
Apple has perfected the art of overcharging for NAND flash in a way that consumers don't even mind. Adding incremental levels of storage costs Apple very little, yet it dramatically expands the functionality of the device from the user's perspective.
This will hurt you more than it hurts me The fact that Apple Inc. (NASDAQ:AAPL) may be considering adding a 128 GB model to the full-sized iPad lineup suggests several things. First, it may indicate that there is currently healthy demand for the 64 GB model, which carries the highest gross margin. A 128 GB model will carry an even higher gross margin, since the incremental cost of going fro 64 GB of NAND flash to 128 GB of NAND flash is nowhere close to $100.
It turns out that Samsung, one of Apple Inc. (NASDAQ:AAPL)'s numerous flash suppliers, just recently started mass producing 128 GB NAND chips destined for smartphones and tablets.
However, any upward pressure on average selling prices due to strong demand for the 64 GB model would be offset by the lower price points of the iPad 2 and iPad Mini, which are seeing strong demand and unit sales.
It's all about positioning Perhaps more important, the addition of a 128 GB model says a lot about where Apple Inc. (NASDAQ:AAPL) may position the full-sized iPad. The tablet market is in the process of segmenting between small (7-inch to 8-inch) and full-sized (9-inch to 11-inch) devices.
The small-sized segment is primarily dominated by the likes of Amazon.com, Inc. (NASDAQ:AMZN)'s Kindle Fire HD, Google Inc (NASDAQ:GOOG)'s Nexus 7, and the iPad Mini. This category of tablets is widely considered primarily consumption devices, since the smaller form factor makes it difficult to get real work done.