Most of the time, Apple (NASDAQ: AAPL) likes to introduce new features to the iPhone before subsequently bringing those features to the iPad. A couple notable examples would be high-resolution Retina displays and Touch ID, among others. The company never brought 3D Touch to the iPad, and may never do so, since 3D Touch never quite lived up to its hype as a potential interface game-changer, combined with the fact that implementing the technology on such a large display comes with incredible technical challenges.
Well, the headline feature of iPhone X might actually make it to next year's iPad Pros.
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Further differentiation of iPad Pros
KGI Securities analyst Ming-Chi Kuo has issued a research note to investors (via MacRumors) predicting that Apple will add its TrueDepth camera system and Face ID to 2018 iPad Pros. That would make sense for a number of reasons.
For starters, if Apple truly believes that Face ID is more secure than Touch ID, then transitioning away from fingerprint recognition to 3D facial recognition could represent an improvement in biometric security. It's too early to say how Face ID will perform both in terms of everyday usage as well as the security implications, since iPhone X won't launch until next month.
Additionally, the TrueDepth camera system is comprised of just a handful of components that could easily be implemented into the iPad form factor, a contrast to a technology like 3D Touch, whose implementation difficulty is directly related to the size of the display. Apple can pack in all those components into the top of the iPad display relatively easily to bring Face ID to the iPad Pro. On top of that, TrueDepth has incredible potential for augmented reality (AR) applications that are largely untapped right now since developers only recently got their hands on ARKit, which will allow Apple to extend its AR platform to the iPad. What's less clear is whether or not Apple will kill off the home button or if the 2018 iPad Pros will have either an edge-to-edge display, an OLED display, or both.
Apple has adopted a "bifurcat[ed]" approach to iPad (and is now pursuing a similar strategy with the iPhone), and including TrueDepth and Face ID would be another differentiating feature for the flagship tablets, in addition to other features exclusive to the iPad Pros like Apple Pencil and Smart Keyboard support and ProMotion displays. The company will likely continue offering more basic iPads at lower price points, while justifying premium prices for iPad Pros with exclusive features like TrueDepth, Face ID, and enhanced AR.
Good news for suppliers
While iPads don't command the same unit volumes as iPhones, this is all still good news for TrueDepth component suppliers Lumentum, Finisar, and II-VI, which provide the vertical-cavity surface-emitting lasers (VCSELs) that Apple refers to as "Dot Projectors." The broader VCSEL industry is aggressively working to ramp manufacturing capacity in order to accommodate demand from a new generation of 3D sensing mobile devices. Meanwhile, Android OEMs will be scrambling to catch up and add 3D sensing to their flagships, which will be challenging since Apple has locked down much of the industry's initial supply.
Importantly, all of this demand is incremental upside that is coming from new use cases, which is why the VCSEL market is expected to skyrocket from approximately $950 million in 2015 to $3.1 billion by 2022, according to Markets and Markets.
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Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends II-VI. The Motley Fool has a disclosure policy.