Ailing Jobs shows up to unveil iPad2

Apple CEO Steve Jobs makes surprise appearance at iPad2 debut in San Francisco, March 3, 2011 Associated Press

Apple CEO Steve Jobs makes surprise appearance at iPad2 debut in San Francisco, March 3, 2011
Associated Press

The wait is over for eager Apple fans wanting the next generation iPad. At an invite-only event in San Francisco Wednesday, the company took the wraps off the iPad 2.

Apple CEO Steve Jobs, who is taking a leave of absence from the company, returned to unveil the new product, which is expected to be a hot seller.

"Good morning," Jobs said to a standing ovation as he walked on stage. "We've been working on this product for a while, and I didn't want to miss today."

As expected, the new tablet is faster with dual-core processors, which just about doubles the CPU performance and makes the graphics speed 9 times faster, while using the same power as the processor from the first iPad. "Dramatically faster," Jobs said. "Up to twice as fast on CPU performance."

It's also thinner than the older model. It went from 13.4mm for the old iPad to 8.8mm in thickness on the new one. According to Jobs, the iPad 2 is now actually thinner than iPhone 4. And it works not only on AT&T's 3G network, but also Verizon Wireless's 3G network.

The new tablet will go on sale in the U.S. on March 11 and will start at $499. The original iPad, which went on sale last April, currently starts at $499 for a 16GB Wi-Fi only version of the product. The 3G version of the 16GB iPad is $629. Apple will begin shipping the iPad 2 internationally to 26 countries starting March 25.

As he summed up the new product's features, Jobs also left the crowd with a prediction: "We think 2011 is going to be the year of iPad 2," he said.

Jobs, perhaps with an eye to a future when he is no longer the CEO, also sent a message to his audience to reinforce Apple's reputation as more than just another computer company.

Video: Steve Jobs unveils the iPad 2

"It's in Apple's DNA that technology alone is not enough," he said. "It's technology married with liberal arts, humanities that yields us the result that makes our heart sing. And nowhere is that more true than in these post-PC devices. And a lot of folks in this tablet market are rushing in and looking at this as the next PC."

To be sure, Jobs has a track record to back up the boast. Apple created a new category of product with the iPad, doing what others before it had been unable to do. In short, it successfully convinced consumers that they needed something in between a smartphone and a laptop/desktop.

From the start, the iPad was a hit. Apple began selling the iPad in April 2010 and it ended up selling a whopping 15 million iPads by the end of 2010, accounting for $9.5 billion in revenue, according to Jobs. In the first fiscal quarter of 2011, the iPad has generated some $4.61 billion for Apple, which is about 17.2 percent of the company's revenue. Not bad for a product that nobody really needed a year ago.

Brian White with Ticonderoga Securities wrote in a research note this week that he believes Apple could sell about 27.36 million iPads in fiscal 2011, generating $16.92 billion in revenue. He said that the iPad has turned into a crucial product for Apple and could represent one-third of Apple's $36.8 billion in incremental revenue that is modeled for 2011.

While the iPad is still hugely popular, the latest version of the device will face some competition. Unlike in 2010, this year there will not be just one or two competitors on the market, but instead there will be hundreds.

The most threatening competition could come from the top handset and computer manufacturers. Motorola is just now releasing its Xoom tablet, built on the latest version of the Google Android OS. Samsung has its Galaxy Tab line of products, which are also based on Android. Hewlett-Packard will introduce its WebOS-powered TouchPad this summer. Microsoft is also looking to get into the tablet market with a new OS that will bring Windows to the tablet form factor. And Research In Motion, the maker of the BlackBerry, is also set to introduce its tablet called the PlayBook.

iPad2 with smart cover
Associated Press

But even with all this new competition, experts, such as CNET's Donald Bell, believe that Apple still has a significant advantage over its competitors even if the new iPad 2 doesn't offer too many more bells and whistles than the original version. He said in a recent interview with National Public Radio's "All Things Considered" that Apple didn't have to change things significantly on the iPad 2 to keep consumers interested.

"Apple has done something pretty special," he said in the interview. "They have convinced consumers to buy a product that they don't really need. They've taken smartphones, which is a kind necessary product, and laptops and desktops and sort of forced them aside to make a new market."

Not only does Apple already have a significant lead in tablet sales compared to its competitors, but it also has a lead in terms of applications offered for the device. Apple now has more than 65,000 apps that are made just for the iPad, Jobs said Wednesday. Meanwhile, Google has just released Android 3.0 OS, which is designed for tablets. And so far Google has far fewer applications that are specific to the tablet format in its marketplace. Jobs estimates the current number of apps for a Google tablet is only about 100.

Side by side: Black and white iPad2s

Still, Google has proven to be a formidable competitor in the smartphone market. The operating system, which has been on the market for only a couple of years, is now on nearly 50 percent of smartphones shipped in the U.S. And the platform is gaining ground globally. The Google Android platform could prove popular for the tablet market as more manufacturers release products using the software.

For a play-by-play of the Apple announcement in San Francisco, check out CNET's Live Blog of the event.

  • Marguerite Reardon On Twitter»

    Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie.

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