Investors had been keen to hear his plans to enhance profitability at the sprawling computing giant, which is vying with International Business Machines Corp in technology services while going up against new rivals from Cisco Systems Inc to Oracle Corp.

In his first meeting with analysts and investors since taking over from the well-regarded Mark Hurd in November, the German executive said HP aims to raise quarterly dividends by 50 percent to 12 cents a share from May.

And HP plans to increase non-GAAP earnings per share to at least $7 a share by fiscal 2014, up 53 percent from last year.

Apotheker, who has seen HP’s share price dwindle since Hurd left, is seen as under pressure to appease investors. The centerpiece of his presentation was a plan to expand into the highly competitive cloud computing market where services are hosted remotely in data centers.

HP will launch a “cloud marketplace” and an array of offerings for consumers, businesses and application developers, pitting the company against the likes of Amazon.com.

“This is a huge market,” Apotheker said. “It is our customers who are pushing us to create this. There is a lot of demand for additional cloud services.”

Creative Strategies Inc President Tim Bajarin said HP has the infrastructure and resources to compete in the market despite formidable competition.

“They’re basically saying this is the cornerstone for their next level of growth,” Bajarin said. “If any company can deliver a rich cloud service, it’s HP.”

Apotheker also said the webOS software HP acquired in last year’s purchase of handheld pioneer Palm will be brought to a wider array of HP devices in the near future. HP can deliver 100 million webOS-capable devices a year, including tablets, printers and PCs, he said.

The webOS TouchPad, HP’s answer to Apple Inc’s iPad and part of its efforts to make inroads into fast-growing consumer businesses, will launch in June, Apotheker added.

LEO SPEAKS

Apotheker succeeded Hurd, ousted last August after the board said he filed inaccurate expense reports to conceal a “close personal relationship” with a female contractor — something Hurd’s representatives have disputed.

The former SAP AG chief has gotten off to a somewhat rocky start. HP’s shares are down 10 percent since Hurd’s exit, and the firm recently trimmed its revenue forecast.

The company has also been involved in a very public spat with one-time partner Oracle, which now ranks among its most vocal antagonists.

The German executive faces a number of challenges in coming years. HP remains a dominant player in major IT markets, including PCs, servers, services and printers, but its gross margin is roughly 24 percent, versus more than 40 percent for rival IBM.

Besides IBM, HP is confronting a number of newly aggressive

rivals intent on becoming one-stop shops for data center customers, including Cisco and Oracle.

Apotheker has vowed to rekindle innovation at HP, known more for cost-cutting under Hurd’s leadership. On Monday, he said research spending has been outpacing revenue growth.

He is still something of a mystery to U.S. investors, but Apotheker has not been shy about putting his stamp on HP, a Silicon Valley icon that has seen more than its share of controversy over the past decade.

In January, HP shook up its much-criticized board, adding five new directors including former eBay Inc CEO Meg Whitman.

Shares of Palo Alto, California-based HP closed at $41.49 and rose to $41.80 in extended trading.

(Editing by Edwin Chan and Richard Chang)

Hordes of fans — some of whom had queued up overnight — formed raucous pre-sale lines, and attracted curious onlookers, in the chilly rain in Manhattan, and in San Francisco.

The crowds erupted as a sea of blue-shirted Apple staff threw open the doors at 5 p.m. and gave high-fives to the first iPad shoppers in Manhattan and San Francisco.

The turnout underscores how demand for Apple’s tablet remains strong nearly a year after the original proved a smash hit, single-handedly creating the tablet market, and inspiring a wave of imitators from Motorola to Research in Motion.

More than 800 queued outside the Apple store on Manhattan’s Fifth Avenue ahead of the launch, hoping to be among the first to get the thinner, lighter and faster iPad that Chief Executive Steve Jobs unveiled last week to strong reviews.

“I wanted to be a part of it,” said Andrew Christian, 26, a pharmacy technician from the Bronx who was No. 11 in line after waiting all night in the rain.

He lined his sneakers with plastic Apple bags.

Shares of Apple rose, $5.32, or 1.5 percent, to close at $351.99.

Wall Street anticipates a strong start to the iPad 2, on par with the original iPad, though some analysts were more bullish. Ticonderoga Securities’ Brian White said Apple could potentially sell 1 million iPads over the weekend — roughly matching sales in their first month on the market in 2010.

“It looks to me like it’s going to be a very strong launch,” he said.

More than 500 people descended on Apple’s flagship San Francisco store.

Andrew Lee and his wife got to the store at 4 a.m. and each bought two iPads — the maximum allowed.

“One for me, one for my wife, one for each of our kids,” Lee said as he gamely posed for a picture from the crowd of swarming photographers.

The lines were in themselves a spectacle. More than 100 onlookers gathered just to watch the activity outside the store in Manhattan.

“It’s curious to see how people can get so fanatic. It’s interesting. I don’t know whether it’s good or not,” mused Giordano Cioni, 23, who is on vacation.

APRIL 2010, REDUX

Wal-Mart spokesman Ravi Jariwala said the world’s largest retailer expected to sell every iPad it can get from Apple, from about 2,300 stores across the country. Best Buy spokeswoman Paula Baldwin said some of its outlets ran out of the tablet and its accessories within 10 minutes.

Analysts say the 10-inch touchscreen iPad 2 has been improved incrementally, not reinvented wholesale. It is thinner, faster and adds a pair of cameras for video chat.

Like its predecessor, the iPad 2′s main chip is designed by Apple. The iPad 2 also includes chips from Broadcom and Texas Instruments, as well as flash memory from Toshiba Corp, according to an analysis by iFixit, a company which provides repair services for Apple products.

The benchmarks for the iPad 2 are clear. The first iPad sold 300,000 units on its first day, 500,000 in the first week, and crossed the 1 million unit mark in 28 days.

Given that the iPad 2 will be available in far more stores to start than the original model, Wall Street would be surprised if the device fails to outpace its predecessor in the early going.

In addition to being sold at more than 200 Apple outlets in the United States, the iPad 2 was available starting on Friday in the stores of AT&T and Verizon Wireless, as well as Best Buy, Target Corp and Wal-Mart Stores Inc.

Unlike last year, Apple did not take orders ahead of the release, so anyone wanting to be among the first to get the new iPad will have to journey to a store. That may help bulk up store lines, providing Apple the buzz it craves and is expert at generating.

That buzz may prove important as rivals gear up for their own full-blown assault on the same market.

Tablet sales are expected to surge to more than 50 million units this year, with Apple capturing more than 70 percent of the market. The iPad 2 hits store shelves in more than two dozen additional countries on March 25.

Apple is releasing the second version of the iPad before many of its rivals have even brought their first tablets to market. Apple sold 15 million iPads last year, generating $9.5 billion in sales, and had the tablet market largely to itself.

The iPad remains the most affordable tablet on the market, starting at $499.

JPMorgan analyst Mark Moskowitz warned this week of a potential bubble forming in the market as early as this year, as Apple’s rivals make more tablets than consumers will buy.

He said supply could outstrip demand by as much as 36 percent in 2011 — a whopping 17.2 million units.

Blackberry maker RIM and Hewlett-Packard Co are set to release tablets in coming months. Some analysts believe RIM and HP could provide Apple with some competition, because both devices offer unique software, and both have formidable sales channels.

And although Samsung Electronics and Motorola have launched tablets, neither appears to poised to give the iPad a run for its money.

(Additional reporting by Dhanya Skariachan in New York)

(Editing by Edwin Chan, Richard Chang and Carol Bishopric)

Braving chilly rain and curious stares, the hordes of fans — many of whom had queued up overnight — formed pre-sale lines from New York to San Francisco hours before the device went on sale at 5 p.m.

The crowd erupted as a sea of blue-shirted Apple staff threw open the doors and gave high-fives to the first eager iPad shoppers in Manhattan.

The turnout will offer hints as to whether demand for Apple’s tablet remains strong nearly a year after the original proved a smash hit, single-handedly created the tablet market, and inspired a wave of imitators from Motorola to Research in Motion.

More than 800 queued outside the Apple store on Manhattan’s Fifth Avenue ahead of the launch, hoping to get first dibs on the thinner, lighter and faster iPad that Apple Chief Executive Steve Jobs unveiled last week to strong reviews.

“I wanted to be a part of it,” said Andrew Christian, 26, a pharmacy technician from the Bronx who was No. 11 in line after waiting all night in the rain. He wrapped his sneakers in plastic Apple bags.

Shares of Apple rose 1.5 percent to close at $351.99 on Nasdaq.

Wall Street anticipates a strong start to the iPad 2, on par with the original’s, though some analysts were more bullish. Ticonderoga Securities’ Brian White said Apple could potentially sell 1 million iPads over the weekend — roughly matching sales in their first month on the market in 2010.

“It looks to me like it’s going to be a very strong launch,” he said.

More than 200 people waited outside Apple’s flagship San Francisco store at 9 a.m. local time, more than doubling by lunchtime.

The lines were in themselves a spectacle. More than 100 onlookers gathered just to watch the antics of Apple fans in Manhattan.

“It’s curious to see how people can get so fanatic. Its interesting. I don’t know whether it’s good or not,” mused Giordano Cioni, 23, who is on vacation.

APRIL 2010, REDUX

Apple is no doubt hoping for a repeat of April 2010, when thousands of people lined up to buy what was then a largely novel device with an uncertain market. But analysts say the 10-inch touchscreen iPad 2 has been improved incrementally, not reinvented wholesale. It is thinner, faster and adds a pair of cameras for video chat.

The benchmarks for the iPad 2 are clear. The first iPad sold 300,000 units on its first day, 500,000 in the first week, and crossed the 1 million unit mark in 28 days.

Given that the iPad 2 will be available in far more stores to start than the original model, Wall Street would be surprised if the device fails to outpace its predecessor in the early going.

In addition to being sold at more than 200 Apple outlets in the United States, the iPad 2 will be available starting Friday in the stores of AT&T and Verizon Wireless , as well as Best Buy, Target Corp and Wal-Mart Stores Inc.

Unlike last year, Apple did not take orders ahead of the release, so anyone wanting first dibs on an iPad will have to journey to a store. That may help bulk up store lines, providing Apple the buzz it craves and is expert at generating.

That buzz may prove important as rivals gear up for their own full-blown assault on the same market.

Tablet sales are expected to surge to more than 50 million units this year, with Apple capturing more than 70 percent of the market. The iPad 2 hits store shelves in more than two dozen additional countries on March 25.

Apple is releasing the second version of the iPad before many of its rivals have even brought their first tablets to market. Apple sold 15 million iPads last year, generating $9.5 billion in sales, and had the tablet market largely to itself.

The iPad remains the most affordable tablet on the market, starting at $499.

JPMorgan analyst Mark Moskowitz warned this week of a potential bubble forming in the market as early as this year, as Apple’s rivals make more tablets than consumers will buy.

He said supply could outstrip demand by as much as 36 percent in 2011 — a whopping 17.2 million units.

Blackberry maker RIM and Hewlett-Packard Co are set to release tablets in coming months. Some analysts believe RIM and HP could provide Apple with some competition, because both devices offer unique software, and both have formidable sales channels.

And although Samsung Electronics and Motorola have launched tablets, neither appears to poised to give the iPad a run for its money.

“The technical and form factor improvements of the iPad 2 stand to make it tougher for the first generation of competitive offerings to play catch-up,” Moskowitz wrote in a research note on Wednesday.

(Editing by Edwin Chan and Richard Chang)

About 350 people queued up outside the Apple store on Fifth Avenue in New York at midday ahead of the 5 p.m. launch, and a handful of people had slept there overnight.

Around 100 people waited outside Apple’s flagship San Francisco store at 9 a.m. local time.

Kurt Collins, 31, and Damon Brown, 34, arrived at 6 a.m. to find a line of about 40 people ahead of them. They said the line was impressive, but smaller than a year ago for the initial iPad launch.

“The iPad 2 is definitely going to be faster, plus it’s cool,” said Collins, a tech entrepreneur. He already owns a first-generation iPad, which he plans to sell once he gets his hands on the new device.

Analysts and investors will scrutinize Friday’s turnout across the United States, keen to estimate if demand for the tablet remains strong nearly a year after the original proved a smash hit, single-handedly created the tablet market, and inspired a wave of imitators from Motorola to Research in Motion.

Chief Executive Steve Jobs last week unveiled the faster, lighter, thinner and camera-equipped iPad 2, which has since garnered strong reviews.

Shares of Apple rose 1.3 percent to $351.25 on Nasdaq at mid-afternoon.

Apple may be hoping for a repeat of April 2010, when thousands of people lined up to buy what was then a largely novel device with an uncertain market. But analysts say the 10-inch touchscreen iPad 2 has been improved incrementally, not reinvented wholesale. It is thinner, faster and adds a pair of cameras for video chat.

The benchmarks for the iPad 2 are clear. The first iPad sold 300,000 units on its first day, 500,000 in the first week, and crossed the 1 million unit mark in 28 days.

Given that the iPad 2 will be available in far more stores to start than the original model, Wall Street would be surprised if the device fails to outpace its predecessor in the early going.

In addition to being sold at more than 200 Apple outlets in the United States, the iPad 2 will be available starting Friday in the stores of AT&T and Verizon Wireless, as well as Best Buy, Target Corp and Wal-Mart Stores Inc.

Unlike last year, Apple did not take orders ahead of the release, so anyone wanting first dibs on an iPad will have to journey to a store. That may help bulk up store lines, providing Apple the buzz it craves and is expert at generating.

That buzz may prove important as rivals gear up for their own full-blown assault on the same market.

GROWING FAST

Tablet sales are expected to surge to more than 50 million units this year, with Apple capturing more than 70 percent of the market. The iPad 2 hits store shelves in more than two dozen additional countries on March 25.

Apple is releasing the second version of the iPad before many of its rivals have even brought their first tablets to market. Apple sold 15 million iPads last year, generating $9.5 billion in sales, and had the tablet market largely to itself.

The iPad remains the most affordable tablet on the market, starting at $499.

JPMorgan analyst Mark Moskowitz warned this week of a potential bubble forming in the market as early as this year, as Apple’s rivals produce far more tablets than consumers will actually buy.

He said supply could outstrip demand by as much as 36 percent in 2011 — a whopping 17.2 million units.

Blackberry maker RIM and Hewlett-Packard Co are set to release tablets in coming months. Some analysts believe RIM and HP could provide Apple with some competition, because both devices offer unique software, and both have formidable sales channels.

And although Samsung Electronics and Motorola have launched tablets, neither appears to poised to give the iPad a run for its money.

“The technical and form factor improvements of the iPad 2 stand to make it tougher for the first generation of competitive offerings to play catch-up,” Moskowitz wrote in a research note on Wednesday.

(Editing by Steve Orlofsky and Richard Chang)

Nearly a year after the original proved a smash hit and inspired a wave of imitators, investors will be watching the turn-out for the U.S. release of the iPad 2, which Chief Executive Steve Jobs unveiled last week.

The release — which as always will be closely scrutinized by fans and investors — may be a litmus test for the overall appetite for tablets.

Apple may still be hoping for a repeat of April 2010, when thousands of people lined up to buy what was then a largely novel device with an uncertain market. But analysts say the 10-inch touchscreen iPad 2 has been improved incrementally, not reinvented wholesale. It is thinner, faster and adds a pair of cameras for video chat.

The benchmarks for the iPad 2 are clear. The first iPad sold 300,000 units on its first day, 500,000 in the first week, and crossed the 1 million unit mark in 28 days.

Given that the iPad 2 will be available in far more stores to start than was the original model, Wall Street would be surprised if the device fails to outpace its predecessor in the early going.

In addition to being sold at more than 200 Apple outlets in the United States, the iPad 2 will be available starting Friday in the stores of AT&T and Verizon Wireless, as well as Best Buy, Target and Wal-Mart.

Unlike last year, Apple did not take orders ahead of the release, so anyone wanting first dibs on an iPad will have to journey to a store. That may help bulk up store lines, providing Apple the buzz it craves and is expert at generating.

That buzz may prove important as rivals from Motorola Mobility to Research in Motion gear up for their own full-blown assault on the same market.

GROWING FAST

Tablet sales are expected to surge to more than 50 million units this year, with Apple capturing more than 70 percent of the market. The iPad 2 hits store shelves in more than two dozen additional countries on March 25.

Apple is releasing the second version of the iPad before many of its rivals have even brought their first tablets to market. Apple sold 15 million iPads last year, generating $9.5 billion in sales, and had the tablet market largely to itself.

The iPad remains the most affordable tablet on the market, starting at $499.

JPMorgan analyst Mark Moskowitz warned this week of a potential bubble forming in the market as early as this year, as Apple’s rivals build far more tablets than consumers will actually buy.

He said supply could outstrip demand by as much as 36 percent in 2011 — a whopping 17.2 million units.

Blackberry maker RIM and Hewlett-Packard are set to release tablets in coming months. Some analysts believe RIM and HP could provide Apple with some competition, because both devices offer unique software, and both have formidable sales channels.

And although Samsung and Motorola have launched tablets, neither appears poised to give the iPad a run for its money.

“The technical and form factor improvements of the iPad 2 stand to make it tougher for the first generation of competitive offerings to play catch-up,” Moskowitz wrote in a research note on Wednesday.

(Editing by Steve Orlofsky)

Nearly a year after the original proved a smash hit and inspired a wave of imitators, investors will be watching the turn-out for the U.S. release of the iPad 2, which Chief Executive Steve Jobs unveiled last week.

The release — which as always will be closely scrutinized by fans and investors — may be a litmus test for the overall appetite for tablets.

Apple may still be hoping for a repeat of April 2010, when thousands of people lined up to buy what was then a largely novel device with an uncertain market. But analysts say the 10-inch touchscreen iPad 2 has been improved incrementally, not reinvented wholesale. It is thinner, faster and adds a pair of cameras for video chat.

The benchmarks for the iPad 2 are clear. The first iPad sold 300,000 units on its first day, 500,000 in the first week, and crossed the 1 million unit mark in 28 days.

Given that the iPad 2 will be available in far more stores to start than was the original model, Wall Street would be surprised if the device fails to outpace its predecessor in the early going.

In addition to being sold at more than 200 Apple outlets in the United States, the iPad 2 will be available starting Friday in the stores of AT&T and Verizon Wireless, as well as Best Buy, Target and Wal-Mart.

Unlike last year, Apple did not take orders ahead of the release, so anyone wanting first dibs on an iPad will have to journey to a store. That may help bulk up store lines, providing Apple the buzz it craves and is expert at generating.

That buzz may prove important as rivals from Motorola Mobility to Research in Motion gear up for their own full-blown assault on the same market.

GROWING FAST

Tablet sales are expected to surge to more than 50 million units this year, with Apple capturing more than 70 percent of the market. The iPad 2 hits store shelves in more than two dozen additional countries on March 25.

Apple is releasing the second version of the iPad before many of its rivals have even brought their first tablets to market. Apple sold 15 million iPads last year, generating $9.5 billion in sales, and had the tablet market largely to itself.

The iPad remains the most affordable tablet on the market, starting at $499.

JPMorgan analyst Mark Moskowitz warned this week of a potential bubble forming in the market as early as this year, as Apple’s rivals build far more tablets than consumers will actually buy.

He said supply could outstrip demand by as much as 36 percent in 2011 — a whopping 17.2 million units.

Blackberry maker RIM and Hewlett-Packard are set to release tablets in coming months. Some analysts believe RIM and HP could provide Apple with some competition, because both devices offer unique software, and both have formidable sales channels.

And although Samsung and Motorola have launched tablets, neither appears to poised to give the iPad a run for its money.

“The technical and form factor improvements of the iPad 2 stand to make it tougher for the first generation of competitive offerings to play catch-up,” Moskowitz wrote in a research note on Wednesday.

(Editing by Steve Orlofsky)

Nintendo, whose growth has been flagging, is making a big marketing push as it launches the Nintendo 3DS, the first device to offer 3D gaming without special glasses.

Nintendo of America President Reggie Fils-Aime called the 3DS a key revenue driver and argued that its adoption should be even faster than the original DS device, which launched in 2004 and has sold 150 million units to date.

“From our perspective, we’ve set the high water bar for a handheld device and our goal is to try to beat that,” he said in an interview on Thursday.

The 3DS launched in Japan last month and will go on sale in the United States on March 27. The Japanese company is trying to stay a step ahead of rivals in the mobile market, which is in a state of flux as the iPhone and smartphones based on Google’s Android have become more robust gaming platforms.

Nintendo is positioning the 3DS as more of a full-purpose entertainment product. It will be able to stream Netflix movies, as many smartphones can.

“This is a full-bore entertainment device, we’re leading with games, but certainly we will leverage 2D and 3D video content,” Fils-Aime said.

Despite the gadget’s unique technology, Nintendo is facing formidable competition in the market, and not just from smartphones. Sony is also launching a next-generation handheld gaming device — code-named “NGP” — at the end of the year.

Fils-Aime refused to concede that the market dynamics had changed significantly, despite the rise of smartphone gaming. “We’re not influenced by what competitive forces are out there.”

“In the end content is what is going to drive the purchase behavior,” he said.

Nintendo’s Wii home gaming console pioneered motion-based gaming and was a smash with consumers. But the Wii, released in 2006, is showing some age in the face of competition from Sony Corp and Microsoft Corp, both of whom have release gesture-based gaming accessories last year.

Nintendo President Satoru Iwata spoke at the Game Developers Conference in San Francisco on Wednesday and made no mention of a next-generation console, despite the hopes of some industry watchers.

Nintendo reported a 46 percent fall in profit in its most recent quarter, and cut its sales forecast for the Wii console to 16 million units from 17.5 million units for the year to March.

But Fils-Aime betrayed no signs of worry about the Wii.

“In our view we have a very long runway for the Wii system,” he said.

The Wii has sold more than 85 million units since launch, far more than Microsoft’s Xbox 360 or Sony’s PlayStation 3.

(Reporting by Gabriel Madway; Editing by Phil Berlowitz)

The Silicon Valley legend has been out on medical leave since late January and his reappearance, in trademark turtleneck and jeans, bolstered Apple shares and reassured investors and fans worried about his health.

Defying speculation in some tabloid reports that he was seriously ailing, Jobs took swipes at rivals and mocked competing tablet computers. Striding back and forth across the stage at the Yerba Buena Center, Jobs spoke passionately about the iPad 2′s features as No. 2 and heir apparent Tim Cook looked on.

The $499 device is thinner than the iPhone 4, twice as fast as the last tablet, camera-equipped, and ships March 11 in the United States and March 25 in 26 more countries. The surprisingly fast roll-out highlights the fierce competition in the tablet market.

“We’ve been working on this product for a while and I just didn’t want to miss today,” Jobs told a packed auditorium in San Francisco with his characteristic flair and energy.

A relaxed-looking Jobs lingered near the theater stage for more than 20 minutes after the show wrapped up, chatting amiably with acquaintances and Apple employees.

In the run-up to the event, there had been almost as much speculation about whether Jobs would appear as there was about the device itself.

Jobs, who has been treated for a rare form of pancreatic cancer, remains on medical leave for an undisclosed condition. An Apple spokesman referred questions about his medical leave back to Jobs’ statement in January that he planned to remain involved in major strategic decisions for the company.

His appearance on Wednesday comes at a critical moment. Apple is launching the next generation of its ground-breaking tablet computer just as its main adversaries are releasing their first such devices.

“Steve Jobs is the most important asset for Apple without a doubt and that’s why investors are so curious about whether he will remain and continue to have an impact,” said Robert Lutts, chief investment officer at Cabot Money Management.

“The stock went up after his appearance but not as much as it normally would if Apple had a fully healthy CEO.”

IPAD 2 ARRIVES NEXT WEEK

The iPad 2 goes on sale at AT&T Inc and Verizon Wireless, and at $499 is about $100 cheaper than Motorola Mobility’s Xoom. Its shares slid 4 percent.

Avian Securities analyst Matthew Thornton said Motorola investors were concerned by both its earlier-than-expected release and its still-aggressive pricing.

“The hardware is as good as anything on the market, the price is still very aggressive, and the software just buries the competition,” said Gartner analyst Van Baker. “They’re still the guys to beat by a large margin.”

“This does serious damage to the competitors in the market. Xoom now looks like an extraordinarily expensive tablet, and the HP tablet looks under-featured.”

Apple sold nearly 15 million iPads in nine months of 2010, two or three times as many as analysts had predicted. The company is expected to sell 30 million or more this year, which would generate close to $20 billion in sales.

That is despite a growing cast of competitors like Motorola, Research in Motion and Hewlett-Packard Co.

Shares of Cupertino, California-based Apple were up 1.2 percent at $353.44 on Nasdaq late Wednesday afternoon.

“It’s pretty positive. It’s definitely a sign that he’s in good enough health,” said Vijay Rakesh at Sterne Agee.

Tablets are seen as a must-have device for consumers and many businesses over the next few years. Analysts expect the market to surge to more than 50 million units this year, and 200 million units by 2015.

As in the smartphone market, Apple’s chief rival is expected to be Google Inc’s Android platform, which is free to license and is being used on a number of tablets.

The iPad, along with the iPhone, is expected to fuel Apple’s growth over the next several years. The two product lines already make up more than half the company’s revenue.

Apple’s products tend to be priced at a premium to its rivals, but the iPad has been priced aggressively low versus the competition, both to dominate the market and because the company can leverage its own retail network and pre-bought manufacturing capacity.

That has pinched the company’s margins, a problem Apple seems happy to live with if the tablet can deliver such startling growth.

A longer-term problem might be the question of who might replace Jobs were he to step down — Cook is the favorite for the top job and has been running Apple in his boss’s absence.

But for now, concerns that Jobs might have to exit — stirred by sensationalist and unsubstantiated tabloid reports — appear to be allayed by Wednesday’s proceedings.

“Investors know his illness is pretty serious, but it’s comforting to know that while he’s in his supposed leave of absence, he’s still involved,” said Capital Advisors Growth Fund co-manager Channing Smith. “The new product looks good and the key is they continue to innovate, which is what we want to watch rather than looking at Steve Jobs.”

Apple shares rose 0.8 percent to close at $352.12 on Nasdaq. It held steady in after-hours trade.

(Writing by Edwin Chan; Additional reporting by Bill Rigby in Seattle, Sinead Carew and Liana B. Baker in New York, Noel Randewich and Braden Reddall in San Francisco; Editing by Richard Chang)

The familiar sight of the Silicon Valley legend in a black turtleneck and jeans cheered fans and investors who had fretted about the health of the charismatic company co-founder. Shares of Apple, which had been flat, climbed as much as 1.4 percent after he strode onstage.

In the run-up to the event, there had been almost as much speculation about whether Jobs would appear as there was about the device itself. Jobs, who has been treated for a rare form of cancer, had been on indefinite medical leave for an undisclosed condition.

“Didn’t want to miss today,” the industry icon told a packed auditorium in San Francisco, holding forth with his characteristic flair and energy.

Jobs’ return to the spotlight comes at a critical moment. Apple is launching the next generation of its ground-breaking tablet computer just as its main adversaries are releasing their first such devices.

The iPad 2 is thinner than the iPhone 4, twice as fast as the last tablet, camera-equipped, and goes on sale this month in a surprisingly fast roll-out that highlights the fierce competition in the tablet market.

Apple sold nearly 15 million iPads in nine months of 2010, two or three times as many as analysts had predicted. The company is expected to sell 30 million or more this year, which would generate close to $20 billion in sales.

That is despite a growing cast of competitors like Motorola Mobility (MMI.N: Quote, Profile, Research), Research in Motion (RIM.TO: Quote, Profile, Research)(RIMM.O: Quote, Profile, Research) and Hewlett-Packard Co (HPQ.N: Quote, Profile, Research).

Graphic showing shares vs product launches:

r.reuters.com/cup38r

Graphic outlining Cook’s impact at Apple:

r.reuters.com/vuq28r

COOK TAKES A SEAT

Tim Cook, who has run Apple in Jobs’ absence, was present but took a backseat to his chief, who said rivals were just “flummoxed” by the iPad.

Shares of Cupertino, California-based Apple rose 0.8 percent to $352.07 on Nasdaq at mid-afternoon.

“It’s pretty positive. It’s definitely a sign that he’s in good enough health,” said Vijay Rakesh at Sterne Agee.

Tablets are seen as a must-have device for consumers and many businesses over the next few years. Analysts expect the market to surge to more than 50 million units this year, and 200 million units by 2015.

As in the smartphone market, Apple’s chief rival is expected to be Google Inc’s (GOOG.O: Quote, Profile, Research) Android platform, which is free to license and is being used on a number of tablets.

The iPad, along with the iPhone, is expected to fuel Apple’s growth over the next several years. The two product lines already make up more than half the company’s revenue.

The iPad, which Apple has priced aggressively low versus the competition, has pinched the company’s margins, a problem Apple seems happy to live with if the tablet can deliver such startling growth.

(Writing by Edwin Chan; Editing by Richard Chang)

Plenty has changed over the course of the year. The iPad became a bona fide smash, essentially creating the tablet category and triggering a wave of me-too products that are just starting to hit the market.

Now, as rivals Motorola and Research in Motion race to catch up, Apple itself is going through a transformation. There is as much speculation about whether iconic Chief Executive Jobs will take the stage at Wednesday’s event in San Francisco as there is about the new device.

Jobs traditionally launches major products with a pizzazz and style that reflect his eye for detail and design. But he took indefinite medical leave last month and Apple has not revealed details of the cancer survivor’s medical condition.

His absence is bound to spark a fresh round of speculation on his condition. And his presence will be scrutinized equally closely for any signals on his health.

Many in Silicon Valley and on Wall Street doubt he will return to the company he co-founded in 1976.

In his absence, it is a good bet that Tim Cook, the company’s operations chief and Jobs’ heir apparent, or marketing head Phil Schiller, will lead Wednesday’s show.

If Cook does appear, investors will scrutinize his performance. While Wall Street has grown comfortable with Cook’s leadership, Wednesday would provide the first major test of his showmanship skills — a key asset for marketing maestro Apple.

Regardless, the company is in little danger of losing its massive lead in the tablet market in the near term. With a big first-mover advantage, the company is rolling out the second-generation iPad just as its rivals are bringing their first offerings to consumers.

IPAD, PART DEUX

The new model will sport the same 10-inch screen but should be lighter, thinner and faster, according to a plethora of analyst and blog reports. Apple is expected to add a camera to enable video chat using the FaceTime application.

Some industry watchers believe it may also sport a chip that enables it to run on networks that use both GSM and CDMA technologies.

Consumer appetite for tablets seems sizable, and businesses are also piloting the devices for a variety of uses, including retail and healthcare. But Apple no longer has the tablet market to itself.

Motorola has just launched the well-reviewed Xoom. Research in Motion, which specializes in corporate customers with its BlackBerry, will begin selling the PlayBook. And Hewlett-Packard Co will bring the TouchPad this summer.

Companies like Samsung Electronics and Dell Inc are already selling tablets, but neither seems to have slowed the iPad’s momentum.

Apple set a high bar with the first iPad, so the company will have a harder time creating a “wow-factor” with the second iteration. It sold nearly 15 million iPads in 2010 after an April launch, three or even four times as many as some analysts had predicted. The tablet added more than $9 billion in revenue for the company last year.

It became a must-have for the holiday season, embraced by taste arbiters such as Oprah Winfrey. Analysts expect the company to sell more than 30 million iPads this year, as the overall tablet market explodes to more than 50 million units.

Jobs’ absence comes at a crucial time. Apple is engaged in a battle in the smartphone market with Google Inc, whose Android operating system was installed on more devices than Apple’s for the first time in 2010. Its usually gravity-defying stock has fluctuated this year.

Shares in the world’s most valuable technology company are up roughly 8.5 percent this year, but slid nearly 7 percent over three trading days from February 17 to 22.

(Editing by Edwin Chan, Kenneth Li and Richard Chang)