TAIPEI–Apple Inc. is working with component suppliers in Asia to test a
new tablet computer with a smaller screen, people familiar with the
situation said, as it looks to broaden its product pipeline amid
intensifying competition and maintain its dominant market share.
Officials
at some of Apple's suppliers, who declined to be named, said the
Cupertino, Calif.-based company has shown them screen designs for a new
device with a screen size of around 8-inches, and said it is qualifying
suppliers for it. Apple's latest tablet, the iPad 2, comes with a
9.7-inch screen. It was launched last year.
One person said the
smaller device will have a similar resolution screen as the iPad 2.
Apple is working with screen makers including Taiwan-based AU Optronics
Co. and LG Display Co. of South Korea to supply the test panels, the
person said.
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Apple, which works with suppliers to test new designs all the time, could opt not to proceed with the device.
Apple spokeswoman in California declined to comment.
The
move comes as Apple is preparing to announce a new iPad in early March,
according to people familiar with the matter. That device is expected
to have a higher resolution screen than the iPad 2 with a similar screen
size, according to people familiar with the matter. A version will run
on fourth-generation wireless networks from Verizon Wireless and
AT&T Inc.
A smaller tablet device would broaden Apple's
portfolio and help it better compete with rivals such as Samsung
Electronics Co. and Amazon.com Inc. It would also begin to emulate the
strategy it took for its iPod music player, which it released in a
number of shapes and sizes over time. The company has taken a different
tack with its iPhone, releasing one design at a time.
Analysts
said a tablet with a smaller screen size will help Apple expand its
market share in the increasingly competitive market.
"Samsung's
5.3-inch Galaxy Note and Amazon's 7-inch Kindle Fire have been selling
well. It means consumers want a tablet that is smaller than the existing
9.7-inch iPad," said Diana Wu, an analyst at Capital Securities in
Taipei. "IPad's features are good enough but pricing would be an
important factor in the mass market, especially in big emerging markets
like China and India."
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The
iPad represented more than 61.5% of world-wide tablet shipments in the
third quarter, down from 68.3% in the second quarter, according to
market researcher IDC.
Samsung Electronics, which supplies Apple
key components such as memory chips and processors used in iPads, sells
its Galaxy Tab iPad competitor in three screen sizes: a 7-inch, an
8.9-inch and a 10.1-inch.
Amazon.com Kindle Fire has a 7-inch screen size and is priced at $199, well below the iPad's entry-level price of $499.
Apple
has long contemplated different tablet designs, according to people
familiar with the matter. But it indicated it was wedded to the iPad's
current size.
In 2010, Steve Jobs, Apple's late co-founder and
chief executive, criticized smaller tablets, saying the iPad's 9.7-inch
form was "the minimum size required to create great tablet apps."
The iPad represented more than 60% of world-wide tablet shipments in the third quarter, according to market researcher IDC.
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Apple,
like many other big personal-computer and consumer-electronics brands,
doesn't actually make most of its products. It hires manufacturing
specialist–many of which are from Taiwan and have extensive operations
in China–to assemble its gadgets based on Apple's designs. They use
parts from other outside suppliers, many of which also are from Taiwan
and elsewhere in Asia. The arrangement frees Apple and its fellow
vendors from running complicated, labor-intensive production lines,
while the ability of Taiwanese companies to slash manufacturing costs
helps cut product prices over time.
In the quarter ending in
December, Apple hit new sales and profit records based on runaway
holiday demand for its iPhone and iPad tablet devices. The company's
share price has climbed in the wake of those results, closing above $500
a share for the first time on Monday.
—Jung-Ah Lee in Seoul contributed to this article.
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