Apple's New iPad Air 2: Thinner, Faster, Irrelevant

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Apple (AAPL) is moving. The latest update to its flagship OSX operating system -- Yosemite -- rolled out on Thursday. Its new mobile platform -- iOS 8.1 -- will be available on Monday, and that's also the day that Apple Pay will begin working its transactional magic.

However, new software cries for new hardware to play along, and that's what Apple was showing off on Thursday at a media event that included new iPads, a high-end Mac and other goodies. The press gathering was a lot smaller than the iPhone 6 event a month earlier, but the market still pays attention whenever the leading consumer electronics tastemaker has something new to offer.

The big hardware news is about the new iPads, but will it be enough to breathe new life into a stagnant product category at the otherwise rocking Apple?

Bring In the New Tablets

Apple has sold 225 million iPads in the tablet's first four years on the market. It sold 70 million over the past year, more than any single PC maker. These are big numbers, but the more problematic metric when it comes to the iconic tablet -- and it's something that Apple had no interest in bringing up during Thursday's showcase -- is that year-over-year tablet sales have fallen for two consecutive quarters. We'll find out after the market close on Monday if that streak stretches to three when Apple reports its fiscal fourth-quarter results.

Apple unveiled the iPad Air 2 on Thursday. It's the thinnest tablet on the market, 18 percent thinner than last year's iPad Air, and only half as thick as the original iPad that established the category four years ago. It also has an improved chip to make it faster without sacrificing battery life, which clocks in at a reasonable 10 hours.

The iPad Air 2 offers fingerprint-scanning technology and an improved camera. It also works nicely with the growing App Store ecosystem that's now up to 675,000 downloadable apps. Sticking to the same pricing conventions that have defined Apple's regular tablet updates, the iPad Air 2 starts at $499, with higher prices for models featuring more storage capacity or 4G chips beyond Wi-Fi connectivity.

Apple also updated its smaller tablets. It didn't go into a lot of details on the iPad mini 3 line, but they start at $399. Just as we've seen following Apple's other iPad updates, it will continue to offer previous incarnations at lower prices.

There's No Killer App

It's hard to argue that Apple doesn't make the sweetest tablet on the market. The rub is that since only Apple makes iOS tablets -- and the world's most valuable tech company is highly protective of its profit margins -- the new iPads are (as usual) pricier than comparable Android options.

Apple fans will suggest that the iPad Air 2 and iPad mini 3 are worth the premium. It may not sport the same open architecture as Google's (GOOG) (GOOGL) Android, but it's also a simple device that just flat out works. However, the long lines that gathered at Apple stores ahead of last month's iPhone 6 launch are unlikely to repeat themselves when the new iPad hits the market next Friday. There will be more than a few early adopters, but for the most part, folks aren't as fanatical about their tablets as they are about their smartphones.

%VIRTUAL-pullquote-Apple has two challenges: getting consumers more excited about its iPad and convincing them that they need to upgrade.%Apple has two challenges on its hands. The first is getting consumers more excited about its iPad than they are about rival tablets that run many of the same apps. The second is convincing consumers that they need to upgrade their hardware. There's an urge to trade up on smartphones when two-year contracts run out, but the same dynamic doesn't exist with tablets in general or the iPad in particular.

Unlike the situation with the iPhone or with the resurgent Macs, which have posted healthy year-over-year growth, customers don't seem to have a compelling enough reason to beat a path to their nearest Apple Store to buy a new iPad Air 2 or iPad mini 3. Tablets have established themselves as a viable medium, but as iPhones get bigger and rival tablets get cheaper, the buzz and excitement are greatly diminishing.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. He owns an iPad, a Kindle Fire, and probably another tablet or two hanging around the house that he hasn't messed with in some time. The Motley Fool recommends and owns shares of Apple and Google (A and C shares). Try any of our Foolish newsletter services free for 30 days. Check out our free report on the Apple Watch to learn where the real money is to be made for early investors.
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