Will the Kindle ignite Apple's tablet strategy?
Amazon's success could prompt a major redesign of the iPad.
According to DigiTimes, Apple could come up with a 7.85-inch iPad next year in order to overcome the challenge posed by the 7-inch Kindle Fire tablets, even as other competitors such as Research in Motion (RIMM) and Motorola Mobility (MMI) continue to struggle in the tablet market.Do 7-Inch Tablets Stand a Chance?). This theory stemmed partly from the perception that the 7-incher is a tweener -- too big to be a smartphone and too small to be an effective tablet. If Apple indeed comes up with a 7- to 8-inch tablet, it will be a significant design change from the current 10-inch screen of the iPad.
Speculation around the specifications of upcoming iPads has picked up in the last few weeks with various sources claiming that Apple could come up with a revamped iPad 3 and a cheaper iPad mini next year. (See New iPads Could be the Next Trigger for Apple Stock)
We believe that the iPad 3 will be a high performance iPad with some attractive features such as voice recognition service Siri, presently a key feature of iPhone 4S. The new iPad might also have a high resolution screen. On the other hand, Apple could launch a cheaper version of the iPad with fewer features without reducing the screen size dramatically.
Our $500 price estimate for Apple stock is about 30% above market price.
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The stock has soared 76% over the last 2 years and is testing long-term resistance levels.
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