Apple's Next Product Could Eliminate One of Samsung's Biggest Advantages

By Markets Fool.com

Apple's next iPad could launch alongside a stylus, according to KGI Securities analyst Ming-Chi Kuo (via Apple Insider). Kuo's prediction follows a wave of patent filings that suggest Apple has an intense interest in digital pen technology.

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In addition to giving buyers another reason to consider Apple's tablet, the launch of an Apple-made stylus could further undermine rival Samsung's attempts to differentiate and sell its competing products. Samsung's high-end Note series -- which includes both large phones and tablets -- are uniquely defined by Samsung's own stylus, the S-Pen. Although Samsung has lost its near monopoly on large screen phones, it's currently the only major mobilemanufactureroffering stylus-equipped handsets, and one of the only ones offering stylus-equipped tablets. Apple's entrance into this category could further erode Samsung's base of high-end buyers.

Steve Jobs -- wrong again?
If Apple does unveil a stylus, it will stand as yet another example of a market its iconic founder misjudged. Despite his brilliance, Steve Jobs was no fan of small tablets, or subscription-based music services (Apple now offers both). He also despised styluses, declaring that "no one wants [one]."

Of course, Jobs was right, to some extent. The original iPhone competed against several handsets that depended on stylus input -- all of them failed; the iPhone established the touch screen as the default method of input for any smartphone. But styluses have their purpose, and are obviously advantageous in certain situations (handwriting, drawing).

Apple's rivals haven't given up on the stylus
Samsung's Note phones and tablets have sold tens of millions of units worldwide. The S-Pen, which has shipped with every Note device, may have contributed to the Galaxy Note's success.

Samsung has made significant improvements to its S-Pen over the years. The latest version -- the Advanced S-Pen -- offers twice the sensitivity of the S-Pen included with the Galaxy Note 3, and can detect both speed and rotation. Samsung's Galaxy Notes include software to take advantage of the S-Pen, offering features such as handwriting detection.

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Microsoft has also been a vocal supporter of the stylus, though its efforts have been relatively low-key in comparison. In contrast to Jobs, Microsoft's founder, Bill Gates, has often spoken in favor of pen input, arguing that it's vital for any productivity-focused tablet. Keeping with that line of thought, its Surface Pro ships with a stylus, and the next version of its operating system, Windows 10, may include features aimed at stylus users.

Apple has a huge advantage over its competitors
So far, neither Samsung nor Microsoft has truly established the stylus as a necessary component to a mobile computing experience. Both are hampered by software, and to some extent, install base.

Although Samsung remains the largest seller of smartphones in the world, only a tiny minority of Android users have its S-Pen. In fact, only a small subset of its own customizers have it, as the vast majority of its phones (such as its flagship Galaxy S5) and tablets (the low-cost Tab series and high-end Pro series) do not include it. Unsurprisingly, then, while most of Samsung's mobile apps -- and a few specialized third-party apps -- take advantage of its existence, the overwhelming majority of Android apps don't support it.

The same is largely true for the Surface Pro's stylus. Microsoft's OneNote works well, as do several drawing-focused third-party apps, but it offers little advantage to the average user. Sales of the Surface have improved in recent quarters, but it remains a relatively small business, totalling, perhaps, in the single-digit millions (Microsoft has not disclosed exact sales figures).

This is one area where Apple could shine. With its ownership of iOS, Apple could build support for a stylus directly into its mobile operating system, and with a large base of active users, third-party developers may be much more likely to build apps that take advantage of it.

Of course, an Apple-made stylus remains speculation at this point, Kuo has a fairly solid track-record, but isn't always right. Still, if Apple did release a stylus, it would pose a threat to its rivals in the space. Stylus-fans, who may have flocked to the Galaxy Note and Surface Pro, could be won over to Apple's products.

The article Apple's Next Product Could Eliminate One of Samsung's Biggest Advantages originally appeared on Fool.com.

Sam Mattera has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.