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You are here: Home / Business Briefing / Will iPad Mini Hurt or Help Apple?
Will iPad Mini Hurt or Help Apple?
Will iPad Mini Hurt or Help Apple?
By Adam Dickter / CRM Daily Like this on Facebook Tweet this Link thison Linkedin Link this on Google Plus
Back in 2010, Apple CEO and founder Steve Jobs derided 7-inch tablets as "tweeners" -- too big to compete with smartphones and too small to compete with the iPad. But that was then, and this is now. Say hello to the iPad mini, a tweener in its own right, at a mere 7.9 inches tall.

Apple introduced the iPad mini -- and yes, that's mini with a mini 'M' -- at a press event Tuesday, October 23, in typical Apple style, following weeks of speculation and rumors.

While Apple already controls the majority share of the tablet market, the Cupertino king of electronics has seen that marketshare slip from 80 percent in 2010 to just 60 percent today. After Apple introduced the original iPad in 2009, a number of competitors jumped on the tablet bandwagon, including Samsung, Amazon, Microsoft, Google and Acer.

And so, the powers that be at Apple have decided to think outside the box once again -- or at least to shrink the box, in this case -- by inverting dimensions of the iPad from 9.7 inches to 7.9 inches for the mini.

Sibling Rivalry

The 7.9-inch iPad mini tablet will go head to head with Samsung's Galaxy Tab 7.7 and Amazon's 7-inch Kindle Fire, among others. But it's hard to escape the fact that it will also compete with, well, the bigger, orginal iPad.

So, with a cheaper price at $329 for the 16 gigabyte iPad Mini with Wi-Fi, or $429 for 32 GB model, and $529 for the 64 GB model, is Apple undercutting the very product that busted open the tablet market?

We asked Jeff Orr, tablets expert at ABI Research, for his thoughts on Apple's strategy.

"If Apple maintains its momentum, shipping 65 to 70 percent of the world's tablets, one has to consider if the impact of a lower-cost iPad mini will be greater on potential iPad (4th generation) buyers or potential Android tablet buyers," Orr told us.

In contrast, he predicts, "The impact of iPad mini on upcoming Windows 8 and Windows RT tablets is expected to be significantly less."

Impact Unclear

Orr points out that the difference between the least expensive iPad mini (at $329) and a $499 iPad is $170, while Google's Nexus 7 at $249 is still $80 cheaper than even the least expensive iPad mini. That type of difference can be significant for price-conscious consumers, particularly those who aren't die-hard Apple fans.

"The U.S. remains the location for the majority of iPad shipments," said Orr. "This scenario suggests that the likelihood to switch to iPad mini and save more will occur from potential iPad (4th generation) buyers. The obvious question is how much impact will this switching have?"

Orr also pointed out that tablets in the seven-inch range are easier to carry around than their larger siblings, which makes it more likely users will want broadband access via long-term evolution (LTE), high-speed data service, rather than just Wi-Fi. But that means more of an investment for buyers upfront, which could be a concern for mobile carriers.

"The $130 uplift in cost from a Wi-Fi iPad to a 3G/4G version is more significant in the decision-making process than it has been for the higher-priced, 10-inch-class iPad," Orr said. "Expecting a higher attach rate for 3G/4G iPad minis seems counter-intuitive at these price points. Does the opportunity for a mobile network operator increase or decrease with the addition of the iPad mini?"

While all sales are good for Apple, popularity of the iPad mini at the expense of the original could mean a revenue hit for Apple.

"We remain concerned that the ramifications to Apple's financial gross margin and level of profitability could be significant," Orr said, referring to worries that Apple may be cannibalizing its own sales.

Plans To Purchase?

Of course, with Apple's track record and loyal following, the iPad mini is just as likely to be a hit, giving Apple lovers yet more purchase options for the holidays and beyond.

What are your thoughts? Will current iPad owners spend the extra money to buy a second, smaller device -- perhaps leaving the older iPad at home and taking the mini on the road? Will first-time iPad buyers opt for the mini or the maxi? Is there an iPad mini in your future?

Tell Us What You Think


John R:
Posted: 2012-10-24 @ 9:05am PT
@More Jobs for China: You're right that it would be nice for Apple to make its products in the US, but how much more expensive would they be? I say at least double the price.

Posted: 2012-10-24 @ 9:03am PT
Yes, I want one and I think the smaller size is a big advantage.

More Jobs for China:
Posted: 2012-10-23 @ 11:45pm PT
Everything Apple does helps Apple. And everything Apple does helps China's economy more than ours. It's just a shame all these wonderful Apple computers, phones and tablets can't be made in the U.S.A. That's the real loss.

Joanne N.:
Posted: 2012-10-23 @ 11:39pm PT
I love the idea of a smaller iPad. I've thought about getting an iPad, but haven't yet. It always seemed too big to carry around, and not quite as practical as my laptop for 'real work'. But the iPad mini sounds just right. I'll definitely check it out.

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