Just How Much Juice Will Apple Wring From iPad 2?

The iPad 2 hits the shelves Friday, and while it wouldn't be foolish to expect lines at your local Apple store, the magnitude of the device's improvements over the first model have met some skepticism. "While it was expected that Apple would improve on the iPad, it's questionable that the new device is worthy of being hailed as the second generation," Retrovo's Jennifer Jacobson said.

Although Apple (Nasdaq: AAPL) is gearing up for another run on its stores Friday when the iPad 2 goes on sale, Cupertino is not without its reasons to worry.

The iPad 2 received mixed reviews when it was first revealed last week, and it's questionable whether the improvements made to the device will be enough to drive very strong sales. Further, there's speculation that application developers may have to rework their iPad apps to take advantage of the iPad 2's dual-core processor and improved graphics, a move which may send some into the Android camp.

Meanwhile, statistics show Android is taking first place in the United States mobile market; Google (Nasdaq: GOOG) is working to defragment the operating system and, perhaps, unify it in the long run; and Android is expected to lead the tablet market charge by 2014.

In what might be more bad news for Apple, the CDMA iPhone on Verizon Wireless appears to be suffering from the same death grip problem that plagued its cousin on the AT&T (NYSE: T) network. Also, Verizon is going to introduce tiered data plans, doing away with the all-you-can-eat approach it had earlier espoused in a bid to lure iPhone owners away from AT&T to its own network. 

Is the iPad Fizzling?

Since it was revealed last week, the iPad 2 has taken heat from critics who say it offers barely any technical improvements over its predecessor, with some pointing out that its multicore processor and improved graphics have only let it catch up to the Motorola (NYSE: MOT) Xoom, its main tablet rival that was launched days prior.

"While it was expected that Apple would improve on the iPad, it's questionable that the new device is worthy of being hailed as the second generation," Jennifer Jacobson, public relations director at Retrovo, told MacNewsWorld.

"Given that there weren't any groundbreaking feature upgrades, the new device resembles an iPad 1.5," Jacobson added.

Perhaps Apple Chairman and CEO Steve Jobs anticipated this reaction when he stated at the iPad 2's unveiling that you need to combine technology with the liberal arts and the humanities. In other words, the iPad 2 isn't much more technologically advanced, but it's kinder, gentler and more humane.

So, is the iPad 2 dead in the water? Will it not contribute as much to Apple's revenues as expected?

Piper Jaffray analyst Gene Munster reportedly issued a note to investors predicting that 5.5 million units of the device, which will be available nationwide Friday, will be sold this quarter. This is followed by waffle about "factors like online pre-orders, weather, timing in the day and the day of the week" all possibly impacting a consumer's willingness to stand in line.

But those considerations didn't seem to apply when Apple launched the iPhone 3GS, the iPhone 4 on AT&T's network or the first iPad.

Barclays Capital contends the iPad 2 will keep Apple in the lead. Gleacher analyst Brian Marshall has reiterated his "buy" rating on Apple and pegged his price target at US$400 a share, although his note to investors focused on the iPad Smart Cover Apple is offering.

However, RBC Capital analyst Mike Abramsky has reportedly predicted that 40 percent of tablets sold in 2014 will run Android. Considering that Apple has more than 90 percent of the market now, that's a considerable slide.

Reworking iPad Apps

There's some concern among app devs that they may have to rework their existing wares to make the best use of the iPad 2's dual-core processor and improved graphics. However, that may not be as big a problem as feared, Brian Meehan, vice president for sales at Sourcebits, told MacNewsWorld.

"Software development kits are always being updated," Meehan pointed out. "Existing applications should be updated, not rewritten, to take advantage of the new features of the iPad 2."

Android's Threat Increases

Meanwhile, Apple's coming under more pressure from Android.

Android leapt to first place in the U.S. mobile market in January, comScore has announced. Android had 31.2 percent of the market, second placer RIM had 30.4 percent, and Apple was in third place with 24.7 percent.

Further, Google recently released the Fragment API in Honeycomb, aka Android 3.0. This is aimed at curbing the fragmentation of the Android OS.

In addition, Google has announced that it'll include some of the features of Honeycomb, its version of Android for tablets, in the next version of Android for smartphones.

Eventually, Google may combine the two and offer one mobile operating system for a variety of mobile devices.

Verizon Vexations

Finally, the iPhone's expansion to Verizon's network may not be going flawlessly.

The CDMA iPhone 4 has suffers from the same deathgrip problem that plagued the GSM version on AT&T's network last year, according to Consumer Reports, though AnandTech's Anand Shimpi claims the problem's been fixed.

Furthermore, after examining a study from mobile analysis firm Metrico, Wired concluded that the Verizon iPhone's download speeds are actually slower than those of the AT&T model.

Add to that the news that Verizon is going to do away with its unlimited data network plan for CDMA iPhone users and use a tiered approach instead, and it might not be wrong to conclude that Apple needs to find another way to get more revenue.

Apple share prices closed Tuesday at $355.76, up 40 cents in active trading, further signaling investors' skittishness in a market that picked up overall, with the Dow Jones, NASDAQ and S&P 500 registering gains and gold down a tad.

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