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Apple thinks big

Yahoo Finance
Yahoo Finance
Hot Stock Minute

Apple’s (AAPL) message to customers is coming in loud and clear: bigger is better.

New reports out today say the godfather of the tablet is about to introduce a bigger iPad – a 12.9 inch display to be exact. Production of the bigger iPad is expected to begin in the first quarter of next year. The reports follow speculation that a bigger iPhone is coming in September.  

As far as tablets go, though, a bigger screen could be just what Apple needs to keep ahead of the “slump” in tablet growth. Research firm Gartner predicts global tablet shipments are expected to increase just 23.9% in 2014, a slowdown from prior years’ growth.

“There’s been some calls that the death of the iPad and the tablet are here,” said Yahoo Finance Editor-in-Chief Aaron Task. “Calls of its death are probably premature. There’s still a market out there for it.”

But for the 42 percent of Americans who own tablets, there may not be an incentive to go out and upgrade. 

“The upgrade cycle for a tablet is not as sure, probably, as it is for your phone and for laptops,” said Task. A bigger screen might provide that incentive, said Task, especially with back-to-school shoppers. 

Apple needs that boost. The company sold 13.3 million iPads in the third quarter. It may seem like a big number, but it's 9% less than the company sold in the same quarter last year. 

Even if a new, bigger iPad manages to boost sales, there could be a long-term risk. If the iPhone does get bigger, will Apple products from the iPhone to the iPad mini to the iPad begin to blend together and lose some of their trademark identities?

“Apple is very wary of that, which is why to this point they haven’t rolled out a bigger phone,” said Task. “Steve Jobs certainly wasn’t a fan of the big screen.”

In a 2010 Apple press conference, Steve Jobs famously said, “No one’s going to buy a big phone.”

However, competitors like Samsung have introduced bigger models successfully. The result may eventually be a combined phone-tablet - a “phablet" so to speak. But we may also get to a place where families have multiple devices.

“I think [Apple has] realized that as brilliant as he was, he wasn’t right about everything,” Task said about Jobs. “They need to acknowledge what the market is telling them. If they didn’t do that, that would be a real concern.”