Apple may have a 2-in-1 in the works

Some analysts see a need for Apple to further integrate a keyboard with the iPad.

Is Apple planning some variation of a 2-in-1 device that would combine the iPad with a detachable keyboard?

It's not completely far-fetched.

If Apple did so, it would be keeping with a growing industry trend, analysts said. Apple wouldn't comment on this story, but that hasn't kept people from speculating.

Of course, the iPad already works with various Bluetooth keyboards, including Apple's own and those from some third-party manufacturers. There are also various covers that can double as a way to prop up the tablet.

But some analysts see a need for Apple to further integrate the keyboard with the iPad, perhaps even allowing the keyboard to attach to the iPad in some manner, magnetic or otherwise -- and probably not permanently. The setup would likely include other integrated features that could include a keyboard that doubles as a cover/case.

The Microsoft Surface 3, starting at $499, comes to mind, as a comparison.

Asked in an interview if Apple will have a 2-in-1 product for market anytime soon or even to announce at next week's Worldwide Developers Conference (WWDC), IDC analyst Jean Philippe Bouchard said emphatically, "We'll see it in 2015."

His colleague, IDC analyst Ryan Reith, added: "My personal belief, and not anything Apple has confirmed, is that Apple will launch a larger screen iPad in Q4 and they will offer an optional Apple Keyboard, like Microsoft does with Surface." The current size of the Apple iPad and the iPad Air is 9.7-inches, but rumors have suggested a 12-in. iPad is in the works.

Bouchard argued that a 2-in-1 is the natural evolution for all tablets, including Apple's, which have been seeing declining shipments globally.

"An important trend we're seeing is a lot of growth in the 2-in-1, the tablet with a keyboard," Bouchard said. "As you grow the tablet in size, the tablet becomes a productivity tool and requires a keyboard to become a true productivity tool."

That said, there was a dramatic downturn of tablet shipments in 2014 and so far this year, according to IDC.

"As tablets decrease in terms of shipments, the much more positive trend is about mobility and growth," Bouchard said. "Windows 10 will help that trend along with touch and finer touch with a pen and a keyboard in the Surface device," he said.

"The tablet is not dying, but going into transition," Bouchard said.

The growth in tablet shipments sunk dramatically in 2014, reaching about 4.4% growth over 2013 and totaling about 230 million tablets, IDC said in February. Still, that was far behind the growth of 2013, which was 52% vs. 2012.

Then in the fourth quarter of 2014, IDC announced an actual decline of 3.2% over the same quarter of 2013, dropping to 76.1 million tablets shipped, from 78.6 million. A second quarterly decline was again reported for the first quarter of 2015, but IDC didn't release actual figures for the first quarter.

For all of 2015, Bouchard said tablet shipments will fall globally over 2014 by 3.8% (including 2-in-1's), a trend that will continue at least for the next four years. "Tablet shipments are decreasing gradually through 2019 and every year is smaller than the previous one -- in the single digits," Bouchard predicted.

Apple's iPad got hurt by its own success with the release last fall of the new iPhone 6 and iPhone 6 Plus, both which are larger smartphones, with displays of 4.7-in. and 5.5-in., respectively. IDC and various analysts last year noticed that larger smartphones, especially those out previously from Samsung, were cannibalizing sales of smaller tablets with displays in the 7-in. to 8-in. range.

For all of 2014, Apple's iPad shipments declined 15%, to 63.4 to million from 74.3 million in 2013, IDC reported in February. Number 2 Samsung held about even for 2014, at 40.2 million shipped -- a 1% increase over the 39.7 million shipped in 2013.

Smaller tablets under 8-in. will drop from 64% of the market in 2014 to 58% in 2015 and then to just under 50% by 2019, IDC said. "This illustrates the direct impact phablets [large smartphones over 5 in.] are having on the market, as users with larger-screen smartphones have tended to have less need for a tablet with a screen size comparable to their smartphone," Reith said.

Bouchard and Carolina Milanesi, chief of research at Kantar WorldPanel, said even smartwatches like the Apple Watch have cut into the total disposable income consumers have for buying Apple devices. "If you think about Apple, and the same goes for the lower-end Android [market], consumers could pretty much spend the same money on a smartwatch or a tablet...and consumers might find that money hard to justify over a smartwatch," Milanesi said.

Another factor in the decline of tablet shipments is that users simply keep them two or three years, or longer, and can usually update to a newer version of the operating system on the older device, which makes getting a new tablet far less important, Bouchard noted.

In addition to growth in 2-in-1s, Bouchard noted that manufacturers are now trying to sell tablets with cellular connections (not just Wi-Fi) or by increasing the display size of the tablet.

IDC didn't share the size of the 2-in-1 market in its latest forecast, but called it a "small portion" of the overall tablet market and said that 2-in-1's combined with cellular-ready tablets will grow by 5.6% annually in the next five years.

Windows 2-in-1 Surface devices in 2014 shipped about 10.9 million devices, or 4.6% of the total tablet plus 2-in-1 market. Dell, Lenovo and others are making 2-in-1's as well as Microsoft. About 67% of the total market in 2014 was Android, compared to 28% for iOS, IDC said.

Because the growth rate for 2-in-1s is expected to be relatively small, some skeptics doubt Apple will produce a 2-in-1, at least not in the vein of Microsoft's Surface.

Still, Bouchard's and Reith's conviction that Apple will have a 2-in-1 in 2015 was matched -- somewhat -- by some other analysts. Patrick Moorhead, an analyst at Moor Insights & Strategy, believes some kind of 2-in-1 will eventually come from Apple.

Apple was reported to have developed a prototype internally of a large tablet, Moorhead said. "A large tablet would need some kind of stand for it to sit on, maybe even a keyboard, which you could technically call a 2-in-1," he said. "I think they will eventually productize one, as I believe a product category exists between a MacBook and an iPad."

Moorhead noted that consumers have been "gobbling up" third-party keyboards that double as cases for iPads, he added. "There's user demand [for a 2-in-1 at Apple] but I think there's a usability requirement for some kind of iPad stand, not just one designed and built by partners, but [by] Apple," Moorhead added.

"I don't see the Apple keyboard as permanently attached, but I envision something which does detach, but is integrated with the right Apple keys and backlighting," Moorhead added.

Bouchard said Apple might provide its own keyboard for the rumored larger iPad -- to sell in the box with the iPad or as an option. "It might make sense to announce that at WWDC, along with an update to iOS that that allows for multiple apps to run at the same time," Bouchard added.

Of course, it might be wrong to call this expected Apple 2-in-1 an actual 2-in-1, at least as Intel would define it. "There's little difference between a tablet with a keyboard and a 2-in-1," noted Jack Gold, an analyst at J. Gold Associates. "Is the Surface Pro a tablet or a 2-in-1? Could be either."

Gold said Apple probably wouldn't directly market any such product as a 2-in-1, while adding, "it certainly has the equivalent with a high-end iPad and a keyboard."

Part of the reason Apple might not use the 2-in-1 moniker is that competitor Intel has primarily driven the 2-in-1 concept with |several TV ads| (http://www.tvcommercialspots.com/mobile-and-tech/intel-2-in-1s-jim-parsons-at-the-airport-security-best-of-both-worlds-intel-truekey-intel2in1-jimparsons/) featuring comedian Jim Parsons that promote the devices as having "the power of the PC and fun of a tablet."

Indeed, some Intel-powered 2-in-1's do come apart so that one half is a tablet, such as the Asus Transformer series. But others are really more like laptops with clamshell designs that permanently attach a keyboard to a display, which sometimes folds back on itself. One of these is the Lenovo Yoga.

To be clear, IDC analysts do not define devices where the keyboard remains permanently attached to the tablets as 2-in-1s, as Intel would. IDC instead calls these newer devices from Intel with the keyboard permanently attached to the display as "convertibles" that are counted alongside laptops. To be classified by IDC as a 2-in-1, the keyboard must be able to detach like on the Surface, IDC analysts Reith and Jitesh Ubrani said.

In this newer 2-in-1 terrain, definitions get cluttered, Milanesi noted.

"There is now confusion about what a tablet is," she said. "If Windows 10 picks up, there will be consumers buying 2-in-1s that will think they are buying a PC versus a tablet, so to some extent you will be ending up talking about perception and segmentation." In other words, analysts will have to worry about the definitions.

Milanesi had doubts about what Apple could or might announce in a possible 2-in-1/tablet/laptop mashup category. "If Apple went with a 12-in. iPad we might see a different keyboard, but if they wanted to do a new 2-in-1, what better fit would there have been than with the new Air? And they didn't do that."

Time will tell.

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