Apple doubles down on iPad by doubling max storage to 128GB

Not a play to squeeze out the MacBook line, argues analyst

Apple today doubled the maximum storage space of its fourth-generation iPad to 128GB, and announced it would start selling the new tablet next week.

The Wi-Fi-only 128GB iPad will cost $799, while the cellular-enabled model will run $929. Those prices are $100 more than the corresponding 64GB iPad SKUs.

Apple pitched the increased storage as a business play, citing the iPad's success in the Fortune 500, and running testimonials from several corporations who use the tablet.

"Companies regularly utilizing large amounts of data such as 3-D CAD files, X-rays, film edits, music tracks, project blueprints, training videos and service manuals all benefit from having a greater choice of storage options for iPad," Apple said in a statement Tuesday.

The new iPad will also be a money maker.

According to the latest estimates by IHS iSuppli, Apple pays $9.60 per 16GB of NAND flash memory, the type used for iPad storage. But the company increases the retail price by $100 for each step-up in storage.

A 128GB iPad's NAND RAM costs Apple approximately $77, twice the $38 for the 64GB model. Compared to the 64GB version, the 128GB iPad will generate about $62 in additional profit per unit. Apple's profit will be $142 higher for the 128GB iPad than the 32GB device, and a whopping $233 more than for each 16GB tablet.

The 128GB of solid-state storage is the same amount that comes standard with Apple's top-end 11-in. MacBook Air, and the entry-level 13-in. MacBook Air and 13-in. MacBook Pro with Retina laptops. It's double that of the least-expensive 11-in. MacBook Air.

But the storage space similarities don't portend a push against Mac laptops, said Ezra Gottheil, an analyst with Technology Business Research. "I do think they would like to find a way to get some, or even many, users of PCs onto the iPad," Gottheil said of the storage increase.

Gottheil's comment echoed the pitch Apple made today when it announced the beefed-up storage. "Customers ... are finding more great reasons to work, learn and play on their iPads rather than their old PCs," said Philip Schiller, Apple's top marketing executive.

It shouldn't be a surprise that Schiller didn't include Macs in his cannibalization scenario, even though Apple has been adamant that if its products are at risk of cannibalization, it would rather Apple, not a rival, make the replacement sale.

But could that be one of the reasons why Apple doubled the storage of the iPad, to capture sales it fears losing as its self-proclaiming "post-PC" era develops?

Gottheil didn't think so.

While it may seem that an iPad with a larger amount of storage space could better compete with a laptop on productivity and creativity, Gottheil disagreed. To morph the iPad into something akin to, say, Microsoft's Surface Pro -- which most experts see as a rival of ultra-light notebooks rather than tablets -- Apple would have to come up with a slick, integrated keyboard for the iPad and modify iOS to, for instance, allow true app multi-tasking, he argued.

"I'm not sure if more storage is the answer," Gottheil said, pointing out that with cloud options, users can store their documents, video files and the like online. "The real challenge is the memory of the iPad, and looming large apps, especially [Microsoft] Office, that require more [memory]."

The 128GB iPad will join the other models of the fourth-generation tablet -- 16GB, 32GB and 64GB -- on Tuesday, Feb. 5, when the tablet goes on sale at Apple's online and retail stores, and at some Apple resellers.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

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