Will The iPad 2 Come Too Soon?

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The Apple (NASDAQ: AAPL) iPad was launched last April and sold three million units in 80 days. Apple sold 7.33 iPads in its fiscal first quarter. There are a number of reports that Apple will release the iPad 2 on March 2. That may be much too early and risks eroding sales of the current version.

The iPad 2 will probably use a powerful Qualcomm (NASDAQ: QCOM) processor and will be thinner and have a better display. It will also have a front facing camera. The tablet will be built to work on both the Verizon Wireless and AT&T (NYSE: T) Wireless systems. This will give the iPad 2 the same distribution foot print that the iPhone 4 has in the US.

The iPad 2 will probably lack a few critical features. It will not have the capacity to work on 4G networks. This fast wireless broadband is the most important  marketing initiative of all four of the major cellular providers. It is incongruous that a device as popular as the  iPad will not be able to sync with a feature so heavily promoted by its carrier partners.

Because the iPad lacks 4G capability and the original iPad still sells so well, it may be that Apple will market the iPad 2 prematurely. Apple usually has a sense for when it can upgrade versions of the Mac, iPhone, and iPod. The release of the iPhone 4 did cause carriers to sharply drop the price of the iPhone 3GS. That probably pulled some sales away from the new smartphone. The iPad may face the same problems, but this time it may be more acute. Sales of the original iPad are still rising rapidly based on most accounts. Why launch a newer version when that is so?

Apple may be about to take its first misstep in quite a while. It may release a product that the market is not ready for.

Douglas A. McIntyre

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