New Low-Cost 9.7-Inch iPad May Support Apple Pencil

Apple's new low-cost 9.7-inch iPad may include support for the Apple Pencil, according to a new note to investors shared this morning by KGI Securities analyst Ming-Chi Kuo.

Kuo says that he expects Apple Pencil shipments will rise to 9 to 10 million units in 2018 "given that the new low-cost iPad may support Apple Pencil." Kuo says Apple may add Apple Pencil support in order to differentiate the low-cost iPad from competing low-cost Android tablets.

Strong demand for low-price 9.7-inch iPad in 2017. iPad shipments hit 43.8mn units in 2017, well above the 35mn units forecast by the market at the beginning of the year. The primary driver was the low-price 9.7-inch model, whose selling points are competitive pricing and a significantly larger panel than those of six- to seven-inch smartphones (iPad mini was a flop because it was replaced by large-screen smartphones). In a bid to strengthen its selling points and to differentiate it more from low-price Android tablets, the new low-price 9.7-inch iPad (starting mass production in 2Q18) will likely support Apple Pencil.

There have been no previous rumors suggesting the low-cost iPad will include Apple Pencil support, but there was speculation that it could based on the design of the event invite that Apple sent out to members of the media.

The invitation includes an Apple logo that's clearly been drawn using the Apple Pencil, which led people to think that the low-cost education-focused iPad might support Apple Pencil. It's not clear if Apple will offer schools the existing Apple Pencil or introduce a new, more affordable version if the company is indeed planning to debut a lower-cost iPad that works with the accessory.

Adding Apple Pencil support to the low-cost iPad would allow Apple's tablet to better compete with the Chromebooks that are popular in schools, providing the ability for students to draw and write directly on the iPad's screen with a fast, reliable tool.

Though Kuo does not mention the possibility, if Apple is planning to add Apple Pencil support to the low-cost iPad, some kind of keyboard could also be included. With Apple Pencil support and an included keyboard accessory, iPads would be a far more appealing option for schools.

Rumors have suggested Apple is working on a more affordable iPad targeted at the educational market. The new device could perhaps be priced as low as $259, down from the current $329 price tag for the 5th-generation iPad.

Kuo believes 9.7-inch iPad shipments will account for more than 70 percent of all iPad shipments in 2018, which will have a positive impact on Apple Pencil shipments. He expects Apple will begin shipping new iPad Pro models with TrueDepth camera systems during the "around" the third quarter of 2018, which suggests a September debut.

In addition to the low-cost iPad, Kuo's note also mentions Apple Pencil support for future iPhones. He believes the likelihood of such a feature "may increase with future iPhone screen size being enlarged," but he does not believe the 2018 iPhone models will support Apple Pencil.