Apple will remain impervious to a broader decline in consumer demand throughout the technology industry through the release of its third-generation iPad in the first half of 2012 and the launch of a thinner iPhone later this year, analyst Katy Huberty wrote in a note to investors detailing takeaways from a recent trip to Asia.
Data points for Apple are "mostly positive," she said, as the company is expected to maintain unit shipments this quarter, compared to a 10 percent sequential decline from the December quarter in the broader market.
"Apple will also launch iPad 3 in H1 and a slimmer iPhone later this year," she wrote.
Huberty believes production for the next iPad will ramp up at the end of this quarter. She voiced expectations that Apple's next-generation tablet will have a higher resolution display.
As for Apple's next iPhone, Huberty said details on the device remained "sparse," but she believes the device will be ready at the end of the second quarter. The launch will depend on "manufacturing yields," she said, adding that she expects the next-gen iPhone to arrive in the third quarter "unless competition heats up."
According to her, new touch panel technology will enable Apple to make the device thinner. Huberty also claimed Apple is "considering" new casing materials.
The Cupertino, Calif., company also benefited in the December quarter from a decision to keep the iPad 2 on the market at a reduced price after the the third-generation iPad arrives, the analyst noted. Looking ahead to the March quarter, Apple's strength appears to be iPhone 4S driven, though signs also point to the iPad performing "better than seasonal" during the period.
Huberty said it appears that the next-generation iPhone will incorporate Qualcomm's quad-mode chip that would allow it to "run on all 3G and LTE network flavors," but she said it was "too early to know for sure." If Apple were to ink a deal with China Mobile, it would increase confidence that Apple would utilize the chip, she added.
"What is clear about iPhone 5 is that Apple and its supply chain are positively surprised by the demand for iPhone 4S, which increases confidence in strong sales for iPhone 5 later this year. Overall, the supply chain looks for stronger than market growth for both the iPhone (50%+ y/y vs. market 20-30%) and the iPad (20-40% growth, higher with a lower priced iPad 2)," she wrote.
Recent reports have hinted that Apple is in talks with carriers to release LTE-compatible iOS devices later this year. Apple is also said to be in negotiations with China Mobile and has reportedly given the world's largest carrier a "positive answer" on an future LTE iPhone compatible with its network.
Huberty's Asian sources suggested that Apple's strength will be the exception, rather than the rule, in the coming year. The tech supply chain is experiencing "worse than normal seasonality" during the first half of this year due to "macro pressures and back-end loaded product cycles," she said.
More specifically, the analyst cited weak sales in Europe, a seasonal demand drop in the U.S., limited technology/product cycles and "weakening commercial put pressure" in the first half of 2011, especially in the first quarter.
Though Apple's competitors in the PC industry expect the release of Microsoft's Windows 8 operating system to give lift to PC sales, Huberty cautioned that "visibility into pricing, a key determinant of growth," of such devices remains low. The analyst also said she was surprised by the "lack of HDD supply concerns" and expects prices to normalize by the end of the second quarter.
PC makers will need to determine pricing for ultrabooks in particular, Huberty said, noting that the laptop category's bill-of-materials needs to fall in order to hit a selling price that will attract high volumes. Even so, "it remains unclear when or if these price cuts can ultimately stimulate Ultrabook demand," she added. Earlier this week, analysts at Gartner said consumers hesitated to adopt ultrabooks in the fourth quarter of 2011.
Companies Huberty spoke to said they expect the first Windows 8 products to arrive in the middle of the third quarter of 2012, with ARM-based devices taking "longer to ramp to volume" because of software compatibility issues and additional R&D efforts. PC demand is likely to see "at least a modest uptick" following the release of Windows 8.
"Reasons for optimism include: 1) Initial Win 8 engineering feedback is positive, 2) Windows has more corporate support than Android and Apple, and 3) Most vendors expect Microsoft to provide free apps or even products to stimulate demand if necessary," she said.
Within the mobile industry, Huberty sees non-iPhone smartphone demand as having tapered off in recent weeks. She warned that Qualcomm could provide "sub-seasonal" guidance for its Mobile Station Modem chips in the second quarter of fiscal 2012 as a result of the slowdown in demand.