Apple's 12.9-inch iPad Shelved 'Til 2015

Reportedly, Apple Inc. (NASDAQ:AAPL) will delay the mass-scale production of its rumored 12.9 inch jumbo-sized iPad to early 2015. Per reports, this decision was taken by Apple on account of the company’s failure to ramp up production to keep pace with the growing demand for the new iPhones – iPhone 6 and iPhone 6 Plus.

Of late, Apple supplier, Foxconn has been struggling to hire enough workers needed to produce adequate supplies of it’s new iPhones, which generated sales of 10 million units in the first weekend of its debut. Reportedly, the company found  it difficult to split its resources to start mass-scale production of a new large-screen iPad, which forced Apple to postpone production.

Currently, Apple designs 2 iPads -- iPad Air and iPad Mini -- with screen sizes measuring 9.7 inches and 7.9 inches, respectively. On the other hand, the screen of this yet-to-be-launched device is believed to measure 12.9 inches diagonally.

We believe that the development of this new iPad with a larger screen-size is an endeavor on part of Apple to revive iPad sales, which have been declining for the past two consecutive quarters. In the third quarter, iPad unit sales declined 9% on a year-over-year basis to 13.27 million.

We believe that the new device will be more suitable for use in enterprises, given its larger screen size. In this context, Apple’s partnership with IBM (NYSE:IBM) to develop enterprise-centric apps will be a major growth driver in the long run.

However, developing a tablet of this large size is not an easy task as discovered by Toshiba (OTC:TOSYY).  Earlier in 2012, the company unveiled a thirteen-inch tablet called Excite that failed to create a buzz among users. The same can be said about Microsoft’s (NASDAQ:MSFT) Surface Pro 3, which struggled to gain popularity.

We believe that Apple’s loyal customer base and innovative product pipeline are major positives. Moreover, the company’s entry into various new spheres such as healthcare, automobiles and others will boost top-line growth in 2014 and beyond. However, stiff competition from the likes of Samsung (OTC:SSNLF)), Hewlett-Packard (NYSE:HPQ) and Dell remains a headwind.

Currently, Apple has a Zacks Rank #1 (Strong Buy).

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