Apple Delivers a New iPad With Less Hype

By Adam Levine-Weinberg Markets Fool.com

For several months, rumors about potential new Apple (NASDAQ: AAPL) iPad models have circulated widely. Most of the pundits expected Apple to unveil these new models at a press event sometime in March. Thus, many Apple-watchers were surprised to see two-thirds of the month go by without any announcement from the tech giant about a product event.

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The answer to this little mystery became clear this week. Apple made several product announcements on Tuesday, including launching a new (and cheaper) 9.7-inch iPad model. However, it did so without holding any kind of launch event.

A new iPad is arriving soon

Apple's newest iPad model -- which the company is simply calling "iPad" -- is essentially a minor upgrade of the iPad Air 2. Apple first released the iPad Air 2 in late 2014, and for the past year it has functioned as Apple's entry-level full-size iPad, with a starting price of $399.

The new model will keep the popular 9.7-inch screen size. It offers a somewhat more powerful processor -- the A9 -- compared with the iPad Air 2's A8X chip. That said, this is still a full generation behind the speedy A10 processor found in the iPhone 7 and iPhone 7 Plus. By and large, the new iPad doesn't have major technical improvements over the iPad Air 2.

The iPad family is getting a new middle member. Image source: Apple.

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Instead, Apple is becoming more aggressive on pricing. The new iPad will have a starting price of just $329. The iPad Air 2 was occasionally available at a lower price -- some stores offered the 32GB Wi-Fi model for less than $300 on Black Friday last year -- but Apple never reduced its suggested retail price below $399. The lower price and modest performance upgrades may finally persuade some price-sensitive customers to replace their aging iPads.

The new model will be available to order on Friday, March 24. It should start reaching customers' hands (in the U.S. and more than 20 international markets) next week.

Apple makes some other tweaks

In addition to launching the new 9.7-inch iPad, Apple made several other announcements on Tuesday. First, Apple is dropping the 32GB option for the iPad Mini 4 but reducing the price of the 128GB version by $100. As a result, the iPad Mini 4 still has a starting price of $399, but that now includes four times as much storage as before.

In a similar vein, Apple is doubling the storage at all price points for the iPhone SE. The entry-level $399 version will now have 32GB of storage (up from 16GB) while the $499 variant will have 128GB of storage (up from 64GB).

Apple also introduced a new red version of the iPhone 7 and iPhone 7 Plus as part of its long-standing partnership with (RED), an AIDS-fighting organization. Like the jet-black versions of the iPhone 7 and iPhone 7 Plus, the new PRODUCT(RED) Special Edition won't have the lower-tier 32GB storage option, so the starting price will be $749.

Lastly, Apple unveiled some new software on Tuesday. It has created a new app called Clips that's designed to make it easy to create videos on an iPhone or iPad. Apple also released versions of its Swift Playgrounds coding app in five new (and important) languages: simplified Chinese, French, German, Japanese, and Latin-American Spanish.

New iPad Pro models still needed

Considering what Apple actually announced on Tuesday, it's not surprising that it chose to skip holding a launch event. Every Apple "special event" stimulates a lot of interest, and none of this week's announcements were significant enough to justify that kind of hype.

If nothing else, Apple would have needed to roll out new iPad Pros to justify hosting a special event this month. However, either because of supply limitations or other business considerations, the new iPad Pro models have apparently been delayed until May or June. (That lines up -- roughly speaking -- with Apple's annual Worldwide Developers Conference, which runs June 5-9 this year.)

The next-generation iPad Pro tablets may not be ready until as late as June. Image source: Apple.

While the new, lower-priced iPad could lead to better unit sales results for the iPad lineup, it will also drive the next downward move in the iPad average selling price. As a result, it isn't likely to spark a return to meaningful revenue growth for the iPad product line.

To get iPad revenue growing again, Apple needs to launch high-end models with compelling features that consumers are willing to pay a premium for. Investors can only hope the next-generation iPad Pro models will be equal to that task. However, based on the iPad's recent track record, investors shouldn't hold their breath.

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Adam Levine-Weinberg owns shares of Apple and is long January 2018 $90 calls on Apple and short January 2018 $140 calls on Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool is long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool has a disclosure policy.