Apple ready to tackle television with its new iPad

Apple unveiled a new iPad on Wednesday with a display that the company said is sharper than the most sophisticated television sets, upping the ante in the competition to deliver digital entertainment on the go.

At the media event, Apple executives repeated predictions that the iPad would hasten the end of the reign of personal computers in American homes. But their efforts to improve and tout the iPad’s screen show that the company is becoming a threat to another long-established market: the TV business.

“We are taking it to a whole new level and are redefining the category that Apple created with the original iPad,” said the company’s chief executive, Tim Cook.

Staking a claim to the most lasting of consumer electronics — the television — has been an elusive ambition for many firms, including Apple. Google’s push for an Internet television has fallen flat. Video streaming giant Netflix gave up on its own TV set five years ago. Apple, with a modest offering of a la carte videos, has yet to win over hard-bargaining Hollywood studios or break the grip that cable giants have over the market for on-demand content.

With the new iPad, users would be able to go to network Web sites and watch their favorite shows in high definition for free. Some consumers may be more willing to cut the cord to their cable service.

“It just makes viewing video much better on a device and makes the consumption of media much more personal,” said Ross Rubin, an analyst at NPD Group.

Apple is expected to release its own flat-screen television later this year, analysts say. But for now, it has put out a pretty good mobile alternative in the new iPad. Apple also announced an upgrade to its $99 Apple TV set-up box, which streams content to traditional television sets. That video will be offered in full high definition, Apple said.

Wall Street didn’t seem to know how to digest Apple’s announcement. The company’s stock swung wildly during the iPad event and spent most of the afternoon in the red. By the close of regular trading, the stock experienced a .08 percent gain, preserving the company’s status as the most valuable in the world.

The iPad has been critical to Apple’s climb to the top of the corporate world. Sales of the tablet have become a major component of Apple’s revenue since it was introduced two years ago. In the last three months of 2011, Apple said it sold more iPads than any individual company sold PCs.

Yet not everyone was impressed by the new iPad.

“It’s the same screen they put on the iPhone, and they ended up putting it on the iPad. Oh my God, surprise, surprise,” said BGC Partners analyst Colin Gillis. He added that adding Microsoft Office to the iPad “could drive it to become more of a productivity tool. But there was nothing today that really changes the landscape.”

Real estate agent Jim Farrell of Rappaport Cos. in McLean said he’s been using iPads to show off properties. But the improvements won’t change how the firm uses the tablet. He doesn’t expect to buy more for the firm’s agents.

“The iPad 2 is doing everything I need it to do right now,” he said.

Apple’s new tablet, called the iPad rather than iPad 3, will go on sale next week starting at $499. More-expensive versions, starting at $629, will have access to the latest and fastest 4G LTE networks offered by AT&T and Verizon Wireless. Apple also dropped the price of the iPad 2 by $100 to $399.

That lower price was seen by some analysts as a savvy move. It could prove tough for competitors to catch up to Apple and undercut its prices, they said.

Microsoft, Samsung and Google are trying to enter the market or have had limited success. Some experts view Amazon’s $199 Kindle Fire tablet as Apple’s biggest competition, but the online retailing giant’s devices are being sold at a slight loss and are less sophisticated than the iPad 2, analysts said.

Staff writers Hayley Tsukayama and Sarah Halzack contributed to this report.

Cecilia Kang is a staff writer covering the business of media and entertainment.
J.D. Harrison covers startups, small business and entrepreneurship, with a focus on public policy, and he runs the On Small Business blog.
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