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WRAPUP 2-Apple touches record high as iPad 3 sales run hot


Fri Mar 16, 2012 8:25am IST

* Shares hit record soon after first iPad sold

* Teardown shows same key suppliers as for earlier model

* New iPad seen as series or improvements, not major
innovation

By Lee Chyen Yee and Pauline Askin

HONG KONG/SYDNEY, March 16 (Reuters) – Apple’s
new iPad proved to be another hot-seller on Friday,
with hundreds queueing at stores across Asia to be the first to
get their hands on the 4G-ready tablet computer as the company’s
share price hit $600 for the first time.

As consumers lined up around city streets to buy the iPad,
one firm that took the new device apart said Qualcomm,
Broadcom, and Samsung Electronics had all
held onto their prized roles as key parts suppliers.

David Tarasenko, a 34-year-old construction manager who was
the first to pick up the iPad from a Telstra store at midnight
in Sydney, said ever since Apple Chief Executive Tim Cook
revealed the tablet’s third iteration, he couldn’t wait to get
one.

“When Tim Cook announced it, it sounded like such a magical
tool. I just got hyped into it, I guess,” he said.

The new iPad is a progressive development of Apple’s tablet,
with a more powerful CPU and screen and better camera. It was
not marketed as a revolutionary product like earlier versions,
yet Apple devotees still snapped up the latest version.

“The iPad is already a pretty mature product and it’s hard
to revolutionise it any further,” said Dickie Chang, an analyst
with research firm IDC based in Hong Kong.

“It’s slightly heavier than its predecessors and I think
Asian consumers will be more concerned about that,” he said.

“Going ahead, with Tim Cook at the helm now, I think he may
have to come up with another product to mark his stamp. That
could come in the form of launching a smaller iPad with a longer
battery life, for instance.”

Crowds were down on previous Apple launches, but there was
still excitement as stores opened.

“I’ve got the first one and I skipped the second one. This
is a big difference from the first one. The processing speed,
memory, graphical capabilities and everything like that,” said
Michael Kelly in Sydney.

The buzz helped propel Apple shares to record highs in U.S.
trade on Thursday, with Apple stock touching a high of $600.01
before easing back.

It peaked half an hour after the first iPad went on sale in
Australia, extending the market worth of the world’s most
valuable company to almost $560 billion.

Only a month earlier, the stock price had crossed $500 for
the first time. The stock has jumped 45 percent this year.

At Thursday’s closing price of $585.56, the stock is far
more expensive than the $499 starting price for a Wi-Fi iPad.

QUEUES AND SMUGGLERS

The new iPad goes on sale on Friday in 10 countries,
including the United States, Canada, Singapore, France and
Britain, with diehards lining up overnight in front of Apple
stores in Munich, Paris, London, Singapore and Hong Kong.

“After this, well, I’ll first of all open it up and check
it’s as beautiful as I thought. Then I’ll get some sleep,” said
Shintaro Aizawa, 16, who waited 15 hours outside a Tokyo store.

Just across the border from Hong Kong in the Chinese city of
Shenzhen, people keen to get their hands on the new iPad had to
wait for the tablet to be smuggled into mainland China.

“We don’t have iPad 3s yet, but some will arrive later in
the day when the students deliver them to us. We’ll have more
supplies over this weekend,” said a store operator in Shenzhen.

“Customs has become stricter, but if you take one at a time
across the border, that’s still pretty safe. At most they’ll ask
you to take it out of the box to prove that it’s for self use.”

Wall Street expects a strong start for the latest iPad and
some analysts even expect sales of the current model to overtake
the iPad 2. Apple will continue to sell the iPad 2 but dropped
its price by $100 to start at $399.

Apple may sell 65.6 million iPads, according to an estimate
by Canaccord Genuity analysts who also raised their target price
on Apple stock to $710 from $665. So far, the company has sold
55 million iPads since it was launched in 2010.

Tablet sales are expected to increase to 326 million by 2015
with Apple largely dominating the market, according to research
firm Gartner. The iPad competes with Samsung Electronic’s Galaxy
and Motorola’s Xyboard, among others.

IMPROVEMENT NOT INNOVATION

The third-generation iPad is seen more as a collection of
incremental improvements, such as a high-definition “retina”
display and a better camera, rather than a major innovation.

The inner workings of the iPad are similar to previous
models, based on a “teardown” by a tinkerer from California
gadget-repair firm iFixit, who queued up in Australia to get one
of the new tablets and quickly took it apart for a Web blog.

iFixit cofounder Luke Soules’ pre-dawn teardown at a
Melbourne computer shop found Apple suppliers Qualcomm, Broadcom
and Samsung had maintained their key roles in the newest iPad.

The iPad includes a Qualcomm LTE cellphone chip and a
Qualcomm wireless modem for 3G and 4G. Broadcom supplies a
semiconductor handling wireless tasks like WiFi and Bluetooth,
according to iFixit.

The iPad’s new A5X application processor, with improved
graphics horsepower, is based on energy-efficient technology
licensed from Britain’s ARM Holding and is manufactured by
Qualcomm, as in past Apple devices.

Supplying parts for Apple’s iPhones and iPads, the
industry’s gold standards, is considered a coup for chipmakers
and other manufacturers.

Analysts recommend caution in drawing conclusions from the
teardowns because Cupertino, California-based Apple sometimes
uses more than one supplier for a part. What is found in one
iPad may not be found in others.

Still, teardowns remain a key source of information for
investors interested in betting on Apple’s suppliers, and the
appearance of unexpected chips can move stocks.

“There are a whole lot of hedge funds out there that like to
shoot first and ask questions later,” said Alex Gauna, an
analyst at JMP who covers technology stocks.

iFixit said the iPad’s display appears to be from Samsung.

A NAND flash memory chip, used to store media like music and
video, is supplied by Toshiba. Japan’s Elpida
provides the DRAM chips.

The iPad teardown also revealed chips from Avago
Technologies, Triquint Semiconductor and
Fairchild.

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