Filed Under:
Tickers in this Article: AAPL, GOOG, AMZN, NOK
Apple's (NASDAQ:AAPL) big secret was unveiled on Wednesday. The laptop style computer, dubbed the iPad, was the subject of a media spectacle. While Apple insiders are praising the iPad as the most amazing web browsing experience ever, the initial reaction from the public has been much more muted. By all initial accounts, the iPad looks like nothing more than a large iPhone.

IN PICTURES: 20 Tools For Building Up Your Portfolio

An Apple A Day
The iPhone appears to be one the most successful products in Apple's history. Steve Jobs has stated that, with the recent increase in iPhone sales in places like China and South Korea, Apple has now become the largest mobile handset company in the world, surpassing industry giant Nokia (NYSE:NOK). Depending on how you calculate the numbers, Nokia may have a differing opinion. In either case, no one can deny that Apple is now one of the dominant players in the mobile communications market. Apple is looking to become much more with the introduction of the iPad.

iPhone or More?
While the public sees the iPad as a larger version of the iPhone, Apple has a different view. In addition to having all the capabilities of the iPhone, insiders tout the extra features of the iPad - features that could alter the competitive landscape. The iPad is an e-book reader directly competing with Amazon's (NASDAQ:AMZN) e-book reader, the Kindle. The iPad will be linked with Apple's iBooks application. Over past months, several companies have released e-book readers, but it is the iPad that looks to pose the greatest threat to Amazon.

However, Apple will have to sell potential buyers on all of the iPad's features. The basic version of the iPad will sell for $499 versus $199 for Amazon's Kindle. Folks are going to need to justify the higher price based on the other features of the iPad. Ironically, one of the features highlighted by the iPad is the device's mapping ability. This feature is powered by Google (NASDAQ:GOOG). If you are traveling in New York City, you can type in, "Italian restaurants," and the iPad will automatically deliver results for locations in the nearby area. This collaboration is intriguing considering the battles between the two in the past.

Mr. Market's Take
From the initial reaction of the share price, Mr. Market clearly did not find the iPad as exciting as the folks at Apple do. However, such short-term price performance is meaningless. Interested investors should instead focus on what happens this spring when the iPad is released. Even then, one may wish to wait and make sure that the product receives a warm reception.

The Bottom Line
Apple has had blockbuster products as well as busts. It isn't safe to assume that the iPad will be a smash just because Apple made it. Nevertheless, the iPad's introductory price of $499 was significantly less than analysts thought it would be. And with the world becoming more and more wired, the iPad could become a hit in the years to come.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

comments powered by Disqus

Trading Center