After the introduction of the NEWiPAD, Apple has placed itself just two short steps away from dominating the computer market – including PCs. One step, which is widely reported, is a smaller iPAD with an 8” screen that aims for a $299 price point. Amazon will take the rest of the market under $299. The second step is purely speculation on my part but is within easy reach of the current hardware and will result in re-alignments in the semiconductor industry to the benefit of Apple and detriment of everyone else. A leveling will occur that forces some to return to their area of expertise, including a software company based in Redmond. The strategy is multi-faceted and thus will require an additional blog to fully outline.
To begin with we must recognize that the NewiPAD will not only reinforce but expand Apple’s lead in the tablet market. Tim Bajarin in his latest tech opinions column calls it revolutionary because of the impact the high-resolution screen will have on several industries. It is a great article that I highly recommend to anyone who follows the computer industry. After reading this, I sensed that Apple will not want to stop with what they have in the current iPAD but extend it further in order to make it even more competitive with respect to ultrabooks.
As a long time processor marketing guy, I see an opportunity for Apple to go one step further and that is to leverage the Retina display with a high performance graphics solution connected to its future A6 processor. For an additional $20-$25 of BOM cost, Apple can add an AMD or nVidia mobile graphics chip that will push the iPAD into a similar performance window as the ultrabooks to be powered by Intel’s Ivy Bridge – ULV parts. That’s because in this tablet, ultrabook market the Processor is not required to be high performance as the work-load shifts to the graphics unit. Thus the decision by Intel to spend the new transistor budget on improving the Ivy Bridge graphics unit.
The interesting dynamic that will play out in 2012 is that Intel’s Ivy Bridge ULV part will probably not drop below $225 for PC OEMs. Apple therefore will have the opportunity to introduce a $899-$999 Gamer iPAD with 4G LTE that has a $175 processor+graphics cost advantage. Furthermore, I can envision a Gamer iPAD with an 11” screen (same as MAC Air PC) that with an optional keyboard can find its way into the corporate market as an alternative to a Windows 8 machine running on an ARM based nVidia Tegra 3 or an Intel x86 based Atom processor. Apple then will leave it up to corporations to decide if they need an Intel Ivy Bridge based MAC Air or an A6 ARM based iPAD with PC level graphics selling at a discount but delivering higher margins to Apple.
In my previous blog, I mentioned how Apple’s Phil Schiller, Senior VP or Worldwide Marketing, stated that the new A5X processor with quad core graphics was 4 times faster than nVidia’s Tegra 3 and that nVidia resisted responding aggressively to the claims because they had other business at risk with Apple. The de-positioning of the Tegra 3 was a deliberate attempt by Apple to say to nVidia that they should abandon their tablet and smartphone attempts and return to their core, which is developing high-performance PC and supercomputing graphics solutions (In addition, Apple has effectively tagged competitive tablets as less than devices). With a Gamer Tablet, Apple will in effect force nVidia to choose between competing with them or cooperating, because the alternative is to let AMD take the business.
In the next blog we can look at Apple’s likely impact on Intel and Qualcomm in the coming year.
Full Disclosure: I am Long AAPL, INTC, QCOM and ALTRShare this post via: