Why It Would Make Sense if Apple Increased the 9.7" iPad to 326 ppi
If Apple were to raise the resolution of the 9.7" iPad to 2530 x 1897, this would yield a 326ppi display.
I know you're probably asking why Apple would do this. I believe it would independently solve three problems (I will address the developers-don't-like-extra-resolutions problem below):
- Simultaneous-view app multitasking, a common complaint about the iPad. The higher resolution would allow for an app to be run in a "skinny" mode simultaneously next to a second standard-sized iPad app. This would be similar (but probably implemented differently) to Windows 8 "snapping" where an app can be snapped to the side. For example, an iPad app developer would develop a "skinny" companion app (to accompany their normal-sized iPad app) which could be docked to the left of a "standard" sized iPad app. You could have a skinny-view Tweetbot running to the left of normal-view Safari, for example. Alternatively, the extra real estate could be used for a different multitasking system that Apple could uniquely design. I'm not 100% sold that Microsoft's "app snapping" UI is the absolute best form of multitasking, but I think most of us agree that the iPad would benefit from the ability to view two apps simultaneously when needed. iOS 7 would be a great opportunity enhance high-productivity computing.
- Product differentiation from the iPad mini. When the iPad mini becomes retina at 2048x1536, it will be the same resolution as the iPad 4, at an even higher pixel density. Let that sink in for a moment: the iPad mini will have a superior display in terms of pixel density, yet will be priced lower. This could create a perception problem for the full-sized iPad.
However, raising the 9.7" iPad to 326ppi will eliminate the argument that the retina iPad mini has a better screen, and will also introduce a "pro" feature you can't get on the iPad mini: simultaneous-view app multitasking. Fast-forward to a year from now when both the full-sized iPad and the iPad mini come with retina screens. I imagine that very few customers would opt for the full-sized iPad if it provided no easily-recognizable benefits over the iPad mini.
I don't share the view that Apple will eventually eliminate the 9.7" iPad in favor of the iPad mini. I believe the 9.7" iPad will instead be upgraded to function more as a computer replacement (by having several apps running simultaneously in view), justifying it's higher price, higher computing power, and larger size.
- Economies of scale and maintaining iPad gross margins. By raising the 9.7" iPad to 326ppi, the manufacturing costs would be lowered since the displays can be cut from the same sheet used for retina iPhones (and a future iPad mini). This enhances economies of scale thus lowering the cost of manufacturing. On the flip side, Apple undoubtedly foresees a future drop in the margins of their iPad business, as their product sales mix shifts to lower-priced and lower-margin iPad minis. This margin decline will only be exacerbated when the lower-priced yet higher-cost (and more desired) retina iPad mini is released. By offering an iPad "pro" at 326ppi, Apple could stanch the margin declines while retaining robust sales of a 9.7" iPad at the same time. It's a win-win from a revenue, profit, and margin point-of-view.
Apple's release of the 128GB iPad today is proof that Apple wants to make their 9.7" iPad more realistic as a PC replacement. It's probably also a strategy to raise the average margin per iPad sold. Remember that declining margins are one of the concerns the market has about AAPL (whether those concerns actually enough to drive AAPL down as much as it has is a can of worms I won't get into).
I know that Apple also must feel it is time for iOS to grow into an OS that can start to functionally replace Mac OS X. That begins with simultaneous app multitasking, which could allow for drag-and-drop between apps, quicker copy-pasting between apps, and being able to read a webpage while writing in Pages. I also believe that the iOS engineers' interest must be piqued by the app snapping feature and the "contracts" API in Windows 8, both of which are tremendously clever. Moreover, PC sales are declining, and even the demand for Macs are slowing down, so there needs to be an iPad that is capable of carrying the torch.
The best argument against Apple increasing the resolution to 326ppi is that it would add complexity for developers making iPad apps, since additional app resolutions would need to be developed. I understand this argument very well, but I do not believe this obstacle alone is enough to discourage Apple from pursuing the three benefits I listed above (a more capable iOS multitasking system, differentiation from iPad mini, and retaining average iPad margins). They've shown with iPhone 5 that 960 x 640 is not a sacred cow. If it's in Apple's best interest, then they will change an iOS device's resolution when they need to. I don't think it is safe to assume that the iOS's UI for the iPad is "done", considering the iPad is likely the future of Apple's computer business.
