The iPad Air 3 Rumors Heat Up

Ever since rumors began to spread that Apple was planning a big product launch event in March, it seemed likely that an updated 9.7-inch iPad would be one of the new products being announced.

Older iPads still represent a high proportion of the installed base. Photo: Apple.

To look at things a different way, the last time Apple released a new iPad in March was 2012. In the following quarter, Apple sold 17.0 million iPads, bringing in $9.2 billion of revenue. By contrast, in the same quarter last year, Apple sold 10.9 million iPads, generating revenue of $4.5 billion.

It's unlikely that Apple will recover all of that lost iPad sales volume in one fell swoop. Still, having the first new 9.7-inch iPad since 2014 available this spring should drive a return to growth for the iPad product line in the third fiscal quarter.

Cannibalization or slow upgrade cycle?

In its recent quarterly SEC filing, Apple aptly summed up the two key "theories" for why iPad sales have been declining lately: "The company believes the decline in iPad sales is due in part to a longer repurchase cycle for iPads and some level of cannibalization from the company's other products,"

These two explanations have vastly different implications for Apple's future iPad sales trajectory. If the problem is cannibalization from large-screen phones such as the iPhone 6 Plus and thinner laptops such as the new MacBook, then iPad demand may never bounce back to the highs of a few years ago.

On the other hand, if the problem is a long replacement cycle, it implies that a strong wave of upgrade demand is coming -- eventually. The launch of the iPad Air 3 this spring could be the catalyst for unleashing some of that demand.

The next billion-dollar iSecret

The world's biggest tech company forgot to show you something at its recent event, but a few Wall Street analysts and the Fool didn't miss a beat: There's a small company that's powering their brand-new gadgets and the coming revolution in technology. And we think its stock price has nearly unlimited room to run for early in-the-know investors! To be one of them, just click here .

The article The iPad Air 3 Rumors Heat Up originally appeared on

Adam Levine-Weinberg is long January 2017 $85 calls on Apple. The Motley Fool owns shares of and recommends Apple. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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