"This is a serious problem," says tech analyst Rob Enderle. "If people believe the rumor, they will not buy on the [iPad 2] refresh, and Apple's stock price will tumble dramatically. This rumor could be an attempt to pump the stock and needs to be taken with a grain of salt."
The rumor was started by last week when he predicted Apple will release a third-generation iPad just six months or so after the iPad 2 release. The backdrop behind the rumor is that Apple really needs to build a better iPad display (High Def) in order to maintain its lead in the suddenly red-hot tablet market.
For technical reasons, the odds of that happening for the iPad 2 aren't too good. Apple needs to double the resolution on its current display for apps to work well, not just make an incremental improvement. The problem remains that there isn't enough manufacturing capacity to make millions of these supped-up displays, at least not by this spring.
"Right now, the iPad's pixel density is terrible, only 129 pixels per inch," Kyle Wiens of , a Web site that provides free repair manuals and advice forums, . "I can see Apple doing some deals [with manufacturers] in the last six months, spending billions of dollars to get those factories online, and producing those displays 18 months from now."
Wiens had figured an iPad 3 would come out next year boasting the higher resolution screen. If Apple can get the manufacturers in line and deliver an iPad with the high resolution in the fall of this year, that would make a lot of sense, too, he says. "I really like Gruber's idea," Wiens says. "I can see an iPad 2 coming out, and then an iPad 2 HD later this year."
The rumor of an iPad 2 HD (or iPad 3) gained more momentum over the weekend after the Korea Economic Daily cited sources saying that Apple is expected to purchase components used for its handheld devices from Samsung Electronics worth about $7.8 billion this year. Samsung will supply Apple with liquid crystal displays, mobile application processors and NAND flash memory chips used in iPhones and iPads, according to sources.
Such a deal coincides with statements made by Apple COO Tim Cook during last month's earnings call that Apple has been entering agreements with suppliers of key components, totaling at the time $3.9 billion. Cook would not elaborate on the deals, saying: "They're focused in an area that we feel is very strategic, and so I'd prefer not to go into more detail about what specific area it's in. But it's the same kind of thinking [similar to the Flash agreement] that led us to those deals."
It's a good bet Apple is tapping into its enormous $50 billion war chest to lock up display suppliers, much like it did with Flash memory suppliers for the iPod. Clearly, Apple is working to get those high resolution displays on the iPad as soon as it can.
It's always possible that Apple might push back the next iPad to the fall timeframe, or whenever it is able to deliver the higher resolution displays. (However, last week that the iPad 2 has already entered production.)
In the meantime, Apple can update the iOS. "Given they use a common OS platform, it is likely they will at times refresh the hardware out of cycle with the software," Enderle says, adding, "If they are doing a refresh for a new display and a software update, it isn't like they have a choice if neither is ready yet."
But allowing too much time to pass between iPad hardware releases is a risky move for Apple given more than 80 Android tablets poised to hit the market. Simply put, Apple can't let Android tablets go unchecked without an iPad hardware upgrade.
Even without a higher resolution, an iPad 2 released in the coming months should have some compelling new features. Everyone expects an iPad 2 to have a camera and FaceTime, but Apple can hit it out of the park if the iPad 2 also comes in with more RAM, lighter weight, thinner, and, most importantly, a dual-core processor.
"The Daily is pretty much dog slow," Wiens says, referring to the new electronic newspaper for the iPad sold under Apple's new subscription model unveiled last week. For a dime and a penny a day, The Daily serves up more than 100 pages of original news, lifestyle, entertainment, and opinions, breaking news updates, customized sports pages, videos, interactive graphics, and photography.
"You have to really optimize to get things running fast on a screen that big with a processor as slow as the one in the iPad," Wiens says, adding, "Most of the benefits you'll see from a dual core are having processing in the background. I think iOS's multi-tasking implementation is fairly poor right now."
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