Having a new CEO take the reins from an iconic co-founder has not seemed to cause much turbulence for Apple. In fact, the company is stronger than at any point in its history. In its most recent fiscal quarter, the company sold more iPads than in any three-month period in its history; it also tallied June-quarter records for Mac and iPad sales and saw quarterly revenue rise 22 percent from the previous year to $35 billion. More to the point, Apple is now the most valuable company in the world in terms of market capitalization.
But Apple didn't get to this lofty position by doing the same things over and over. Apple executives will be the first to tell you that maintaining the status quo is no way to stay on top. The company will continue to face challenges and questions in the coming year, and its responses to those will determine whether or not Apple will continue to thrive.
How to stay on top of the tablet market?
Apple invented the modern tablet market, and--for now, at least--still dominates it. But while would-be iPad competitors such as the Xoom and the Playbook have come and gone like seasons, more recent upstarts such as the Kindle Fire HD and Google Nexus 7 are chipping away at Apple's once seemingly insurmountable lead.
The perennial rumor, of course, is that Apple will come out with a smaller version of the iPad to compete more directly with the increasingly popular 7-inch tablets. Steve Jobs once derided 7-inch tablets, saying that size "isn't sufficient to create great tablet apps," that tablets smaller than the iPad's 10 inches make "clearly the wrong trade-off," and that such tablets are "tweeners--too big to compete with a smartphone, and too small to compete with an iPad."
Apple wouldn't launch a smaller tablet unless it felt that Jobs's concerns were no longer worth worrying about. (It's not as if Apple has never changed course after a Steve Jobs pronouncement. Just ask anyone who ever owned a video iPod.) The rumor mill suggests that a smaller iPad would actually have a screen closer to eight inches than seven, which would help.
Deciding whether or not to launch a smaller iPad isn't the only choice Apple faces. How should it price a smaller tablet, especially when you can pick up a Kindle Fire for $159 or a Nexus 7 for $199? Remember that the entry-level 16GB iPod touch costs $199 already. Apple has never felt obligated to compete directly on price--until the release of the original iPad, which shocked many with its $500 entry price. To price a smaller iPad competitively, Apple may need to limit its features, storage space, or processor speed.
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