Not everybody loves new iPad 2 cover

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Chart: CNNMoney

Steve Jobs’ appearance at the iPad 2 announcement was not the only big surprise at today’s event. To investors in ZAGG, a Salt Lake City company that makes invisibleSHIELD and other covers and skins for mobile devices, the news of a snappy new cover Apple plans to sell with its new tablet was a huge shock too. And not in a good way.

Shares of ZAGG plunged more than 20% as traders apparently decided to shoot ZAGG first and ask questions later. The knee-jerk response is that Apple’s new cover will make ZAGG products obsolete. 

But that’s silly. Sure, the new cover sounds snazzy. CNNMoney video producer Mason Cohn, who attended today’s unveiling, described the SmartCover as “more advanced” than the original iPad case.

He noted it was a “thinner, more flexible, user-friendly case than original more cumbersome case.” It attaches with magnets (nice!) and comes in 10 colors. Polyurethane version costs $39. If you’re like Judas Priest and are hell bent for the leather cover, the price tag is $69.

But Smart Cover won’t make invisibleSHIELD or other ZAGG products, such as the ZAGGmate, an aluminum iPad case with a Bluetooth keyboard option, obsolete.

Richard Fetyko, an analyst with Merriman Capital in New York who covers ZAGG, said he thought the drop in ZAGG’s stock price was an overreaction. He said investors may not understand that some iPad owners may want to buy the invisibleSHIELD, which is a clear skin as opposed to an actual cover, or ZAGGmate in addition to any Apple products.

"Some consumers may prefer both. Apple’s cover is not a substitute for ZAGG products," he said.

Another analyst who follows ZAGG and asked not to be named pointed out that it’s not as if the company sells any of its products directly through Apple stores to begin with. ZAGG has thrived despite an official blessing from Apple.

A spokesperson for ZAGG also said ZAGG’s latest invisibleSHIELD is finger-print-proof and smudge-proof, a big selling point for any tablet user, let alone iPad owners.

"The recent announcement from apple does not negate the need for invisibleSHIELD," the spokesperson said.

Finally, even though many think the tablet market begins and ends with Apple, it’s a huge, growing business.

"Estimates are for the tablet market to grow at 80% rate over next four years and for there to be 200 million units sold by 2014," the ZAGG spokesperson said.

ZAGG, of course, has been wise to make products specifically targeted at Apple aficionados. But not everyone is a believer in iEverything.

So it seems reasonable to expect ZAGG’s stock to bounce back once investors realize Apple didn’t put the company out of business. — Paul