Apple iPad mini: Winners and losers

Apple iPad mini: Winners and losers

Summary: Apple announced the iPad mini. The petite 7.9-inch tablet will likely heavily disrupt the already-established tablet market more so than the original iPad. Who will gain and lose out from Tuesday's event?

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The iPad mini is a secret no more -- not that it was much of a secret in the first place.

Despite leak after leak dribbled from the tap of the technology media, the long-awaited 7-inch tablet was formally revealed yesterday on the world's stage. But the decisions Apple made surrounding the iPad mini -- not necessarily relating to the feature set of the device itself, and in spite of the vast array of new hardware offered by the technology super-giant -- many were left angry.

Apple's share price dropped significantly after the event, and Google was left red-faced after the world tuned in to a platform super-giant standoff. 

Debuted on Tuesday, the petite iPad mini comes in a bevy of different versions. With only a selection of two colors -- black and white -- the pint-sized tablet comes in the usual 16GB, 32GB and 64GB editions with either Wi-Fi only, or Wi-Fi with 4G LTE connectivity. Using the same LTE hardware specification as the iPhone 5, Apple is manufacturing a range of devices to work across the four major LTE-enabled continents.

More iPad mini coverage: All ZDNet coverage | All CNET coverage | Techmeme | Apple statement

Apple's bid to push into the 7-inch range tablet space will likely spark a massive panic among its rivals, but the news wasn't entirely unexpected. Apple has no doubt raised the bar on the smaller tablet market, but the effects will not be seen this side of the year. Only during the coming fourth or first quarter will we see the impact (or damage) the iPad mini has had on the market.

Apple's announcement on Tuesday may disrupt the market as much as its own profit margins. How the technology giant will pull this off and still generate a profit out of the smaller tablet business -- including its 'original' iPad business -- remains unclear. It's worth taking a look at the winners and losers. 

Winners

Apple: The Cupertino, CA.-based technology giant is without doubt the major winner of the event, it goes almost without saying.

Even some die-hard Apple analysts were sketchy at the long-awaited device and how it would fare against the vast array of existing 7-inch devices on the market. What probably sets it apart is not the screen resolution as it lacks the popular high-resolution Retina display, and not necessarily the size of the device, despite its clear aesthetic appeal. Weight and extreme thinness aside, the device contains 4G LTE connectivity, something ruled out by sources in previous reporting.

But Apple has yet another point of order in the chain of competitive command as it takes on a niche market previously held by Apple's arch rivals, notably manufacturers of Android tablets, such as Samsung, Google, and Amazon, which all have 7-inch devices on the market. 

Apple's brand value alone can sell this tablet, even if there isn't much of a point in buying one. Prospective smaller-tablet buyers have held back for this announcement, and because of the premium added on top of the manufacturing cost of the device -- the profit margin to the likes of you and I -- Cupertino looks like it enjoy a knock-out quarter in the run up to the holiday season.

The education market: Education was mentioned here and there during Tuesday's hardware announcements. It wasn't the filler in the sandwich of the event, but there was a special focus on K-12 students in particular.

The low-priced tablet -- at least for an Apple product -- along with a new version of iBooks, Apple stressed the importance that the iPad is having on the education market. "We have been very aggressive in the [K-12] space, and I don€™t see that changing in terms of competition. €œWe'€™ve all seen hundreds of tablets come to market over the last few years, and I have yet to see any of them really gain what I would call any level of traction at all," said Apple chief executive Tim Cook during the event.

ZDNet editor Andrew Nusca notes that Apple's third quarter was its second consecutive in which the education market bought twice as many iPads as Macs, signalling an educational shift towards the post-PC device. "It's not a zero-sum game in terms of use cases, and there are parts of the market that have yet to be addressed by Apple's product," he observed.

Losers

Apple: Despite its record iPad sales and its massive majority of the tablet market share, the iPad mini has just thrown a whole can of whoop-ass on its existing tablet range. 

We know already that Apple's iPad has started to cannibalize PC sales. During the media event, Cook noted that over the past six years, the growth of the Mac has surpassed that of the PC market. He also noted that there were more iPads sold than any other PC manufacturer during the second quarter. The iPad is clearly a popular device, that's a given fact.

But the iPad 2 "died" yesterday when the iPad mini was announced, Business Insider claims. While the iPad 2 will remain on sale for the near future, the iPad mini will likely take its place when the iPad 2 is discontinued. It's only $70 less than the iPad 2, and with the range of features present on the iPad mini missing in the iPad 2, it's almost a no-brainer that one would buy the larger iPad 2 over its smaller sibling.

What's that going to do to Apple's profit margins? A huge amount. Despite the price premium put on the iPad mini, compared to its Samsung, Google, and Amazon's tablets, the iPad mini will likely make less money than the iPad 2 or the new iPad 4 (fourth-generation improved iPad with Retina display, announced yesterday). Apple must hope that it will generate enough sales of the iPad mini to surpass that of the iPad 2 in order to break through the amount it would have generated otherwise.

Piper Jaffray analyst Gene Munster, who specializes in Apple, told AllThingsD: We believe that the smaller iPad could cannibalize one million regular iPad units in December or a rate of cannibalization at 20 percent. [So] for every five million smaller iPads, you lose one million standard iPads."

Enterprise: The move to dish out a smaller iPad was a money grab, and little more. The device is not revolutionary or special. It's a pitch to the education market and end-consumers, but it was not given a 'point' by Apple executives. It was a push by Apple to compete in a space that the firm had fallen behind in.

As mentioned yesterday in the post-event analysis, the point of the device was to expand the reach of the money-making content on the firm's back-end services rather than the tablet itself. There were no concessions for the enterprise. There wasn't an 8GB version for the sole use of sideloading enterprise applications, it was a consumer-focused stunt and nothing more. 

"The same storage sizes are a dead giveaway. When faced with the "enterprise problem" of offering a slimmed-down iPad mini for business use, Apple would have had to go far lower than the $329 base model price it was offering, perhaps to $299 to retain the pricing consistency. But as many have pointed out, this would price the device at the same price as the iPod touch -- a mini-version of the already slimmed down iPad mini. 

"What it's like to own an Apple product." Image: The Oatmeal.

Samsung, Google, Amazon: The maker of equally petite tablets, both Google and Amazon must be shaking in their boots, knowing full well that Apple will come along late to the game and chomp up their sales ahead of the Christmas rush. Samsung has less to worry about, however. Its tablets never really took off in the first place, according to court documents. The Korean electronics giant sold only 1.4 million tablets worldwide since its range launched, compared to the 32 million iPads sold in the U.S. alone up to the second-quarter.

However, Google and Amazon are likely prepared for this. After all, Google makes just enough to cover its costs on its tablet business, and Amazon makes a loss on its Kindle devices.

iPad 3 owners: Despite there being four generations of the iPad, only three are now on sale. The original iPad is no longer on sale because it's old, clunky, and wasn't powerful enough to run the latest version of iOS, Apple's mobile operating system for the platform.

However, some are wondering exactly how the iPad 3 fits into the mix. The truth is: it doesn't.

Branded "the new iPad" when it was first released earlier this year, and dubbed the iPad 3 by everyone else other than Apple, it has now been discontinued in favor of the "iPad with Retina display," which the press is already dubbing the iPad 4. Why? It's the fourth-generation tablet.

The iPad 4 is all but exactly the same as the iPad 3 except it has a beefed up processor, more RAM memory, and runs faster. 

Where does that leave the iPad 3? On the scrapheap, only seven months after dishing out the Retina display tablet.

CNET's Roger Cheng has more on the frustration of owning a now-discontinued iPad 3. The tablet will still be supported and likely feature the next-generation iOS 7 mobile operating system, but a lot of people are angry that they've shelled out $499 for the base model and less than a year later their tablet is already replaced by a better model. Not a cool move, Apple. 

However, Apple has actually simplified the line-up considerably, but our 'normal' naming convention dictates that we have the iPad mini, the iPad 2, and the iPad 4 with a Retina display. "Which iPad do you have?" says one. "The one with the better display," says the other. Simple. 

Simple, right? It is when Apple puts it like that, but even Tim Cook was tripping up over his own words on Tuesday when he was trying to remember how many iPads there were, which ones still existed, and which ones had fallen behind. If the chief executive is stumbling over the iPad, there's little hope for the rest of us.

Image credit: James Martin/CNET.

Topics: Apple, Amazon, Android, Google, iOS, iPad, Tablets, Tech Industry

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40 comments
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  • Not much people cares about mini, except fans.

    The price is a total rip-off.
    owlllnet
    • We'll see

      In reply to @owlllnet, we'll see about that. It's about $80 more expensive than the Nexus 7, which is to be expected. I mean, when have Apple ever competed on price? They just don't do that. It's nothing to do with fans -- Apple make a very clear value proposition, and people either buy or they don't. Lately, they do, it seems.

      I suspect they will find lots of takers. Many millions. You need to see beyond the curtain -- beyond your own dislike of Apple. It's like BMW. Here in the UK You can buy a luxury sedan from Ford for 50% less than the price of a BMW 3-series, yet BMW 3-series still sells well. In fact, here in the UK, the BMW 3-series became the #1 selling model of any car a few years ago. People make their choice, and sometimes that involves paying a premium. It's not all about price and feature check-lists. It's far more complicated than that.

      Even if you don't watch the whole thing, you should watch the segment from yesterday's event where they show the difference between the iPad mini screen and a 7" wide-screen tablet for reading webpages. That is what makes Apple successful, right there. Apple know what they're doing. They give this a lot of thought. Their 'marketing genius' is simply to create products that people will really enjoy using. It is that simple.
      ajo1979
      • i laughed

        Your reference to cars is wrong....

        BWM offers pretty much everything the other car does, and then a whole lot more.

        What does the Ipad Mini offer over a Kindle fire HD?
        danjames2012
        • User experience

          Apple offers something with its products that no other brand offers -user experience. Their products may not b better, they may b at par or even lag on features, but d user experience is d most consistent n satisfying. It s d simple reason why Apple is number 1
          Rohan Pokhare
          • iOS user experience is stagnant and...

            quickly becoming overrated ever since Jellybean came out and more recently Windows RT. Both of these mobile OSes have kept on improving while the iOS is not. Consistent, yes, improving, absolutely not.

            Beginning this last quarter, I've begun hearing iOS users say that the iOS interface is boring in many ways now compared to what else is out there. That had never been the case before.
            laequis
          • Apparently

            Over 100 million iPad owners do not agree with you.

            The OS is just a component of the experience. Even if iOS is far superior than both Android and Windows RT, this alone is not enough. It's the whole design, attention to detail and the apps that make the difference. It's a secret sauce Apple uses :)
            danbi
          • And 100 million BoyZone fans

            do not agree that Deep Purple were a better band. So your point is?
            12312332123
          • Absolutely Agree

            iOS is boring, but simple which is why it's popular. That, and the cattle/sheep mentality. For me, the Jelly Bean Android OS is a far better UI. It's a bit more complex, but the cool thing about it is that I can quickly customize and make it behave much simpler than the iOS UI. It's definitely a lot more of an attractive UI. Every time a play with iOS, it makes me miss JB more!
            Deldrin
          • The present not equals the future

            User experience is good. And Apple reigns, for the moment. As an Apple customer, I think they need to improve, my next tablet is not going to be an iPad, and it's a shame, because I like the device, but the limitations have become unbearable. By the way, my next phone won't be Apple either.
            Erasmo Cepeda
        • Clearly you don't know cars

          because at the time of the 3 series dominance, the motoring press questioned the underlying reasons behind the trend and found there was virtually nothing extra from BMW. People were buying it for the badge, to have the badge sitting on their drive. Mostly it was corporate lease contracts encouraging the trend and in most cases reducing the price differential considerably.

          So actually the analogy is correct and extremely close to the apple situation. What extra do you get with an ipad mini over the nexus? Oh yes, user experience, the least tangible benefit ever.
          Little Old Man
        • The analogy is right

          HD rear facing camera that records and front, much faster processor, waaay better apps (especially for art and music), better memory, oh and a way better os as well, if you want to check email buy a kindle, if you want to be able to everything a tablet can in this day and age, get an iPad, kinda like the analogy, if all you want to do is go back and forth get whatever, if you want to go their in comfort and luxury get a bmw, the analogy works fine.
          Origen32
          • Actually

            Regarding the OS and it's UI... iOS is like approaching a BMW, then getting in a realizing you've seduced by how well it looked on the outside because on the inside it's a simple, boring, ho-hum, yawn interior of an economy car and no longer a BMW! It works, and works great, but whatever. Where as Android Jelly Bean is a simple car on the outside, but you get in and feel right at home with the comfort of a luxurious BMW. There are more controls, but it's laid out so elegantly and is fluid and easy to use. And once you quickly make all the auto adjustments, it's much simpler to use than even the iOS/econo car interior. For me. I'd rather be in luxury than look like I'm in it.

            I'm sorry, I've played with both and iOS can't hold a candle to Android Jelly Bean. That and it has all the quality apps I need. BTW, the hardware is pretty comparable. Nothing "much" or "way" about it.
            Deldrin
      • $80 > Nexus 7 ... for another 5 days

        Google's event next Monday is basically known to include price drops on the Nexus 7, as well as introduction of a Nexus 10 at some not-yet-disclosed-but-no-doubt-attractive price point (especially given that it will steal the iPad's resolution/ppi crown away).

        Nexus 7 8GB are projected to end up at $149, with a possibility they'll drop all the way to $99 (though i think that chance becomes very slim, with Apple not choosing a
        daboochmeister
        • Huh ... rest of reply was cutoff

          Rest was:

          a less than $300 price point for the mini.

          16GB Nexus 7 is widely believe to be moving to $200, 32 GB to $250. So that leaves the iPad mini at $130 more than a comparable 16GB, $180 more than a comparable 32GB. And the 16GB iPad mini ends up at $180 - $230 more than an 8GB N7.

          Add to that, rumors are that a very attractively priced 10" Nexus tablet is in the mix, with screen characteristics better than the iPad 3, but costing less than the iPad 2 ($300 - $350 is rumored).

          AND, 3G and LTE models, at similarly smaller price points.

          Next Monday will tell, but if thse rumors bear out ... Google may very well enjoy a very solid Christmas sales season. Heck if the N7 8gb goes down to $99, i'll probably spring for 2 -- probably at least 1 if $149 (or maybe go grey market, get a couple of the attractive Ainol or alternate 7" Jelly Bean contenders).
          daboochmeister
          • And still almost no optimized apps?

            and selling at a substantial loss (as you are stating with the prices) Google will continue to see their profits decrease and their stock will continue a free fall.
            Bruizer
          • Apple stock is the one in free fall

            And Google might be gouging it's user base the way Apple does, but it makes enough profit to simultaneously expand it's user base too.

            Apple doesn't care about expanding it's user base. They're happy gouging and re-gouging the same user base over and over because they can.
            laequis
          • Apple and Google customers

            Let's set some facts straight, so that you are not delusional anymore.

            Apple's customers are those who buy their devices.
            Google's customers are the advertisers. Anyone else, including the OEMs and those who buy the end products are merely... subjects. Patients, if you will..

            So try again.
            danbi
      • The BMW 3 series is a piece of scrap

        People buy BMW's simply because of the brand name.

        The new models are finally looking quite nice outside, but for almost a decade the looks of all but the most high end BMW vehicles such as the M6 were appalling. Everything inside a low-mid BMW looks and feels cheap, even dated, to the point of being insulting. They also don't have the clever afterthought features that many other manufacturers incorporate. I would rather drive an Audi, VW, Honda, Mitsubishi, Alfa, Citroen, Mazda, Vauxhall/Opel ANY day of the week. People still choose to spend great wadges of cash on the BMW brand name - because the car itself is almost immaterial.

        Same with Apple - people choose to buy it simply because it is Apple. It is not "complicated" as you assert, it is pretty much just "paying a premium" for dumb brand loyalty. The real proof is when you move away from tablets and look at things like the Mac Pro. I overheard someone who believe it or not, actually works in IT, yet believes the Mac Pro is superior to other PC's available. Yeah, this guy is not interested in OSX, he uses Windows, yet he chose to buy a Mac Pro. Why? Why indeed. If you take the decidedly mid-range components of a Mac Pro, you will probably have more than a grand left over to build a bespoke chassis of your very own. There is no 'magical' engineering involved. A Mac Pro, is every bit a PC-clone and not a particularly nice one, yet people spend the premium on a Mac Pro. Its dumb. Case closed.
        12312332123
      • I also laughed

        Your commentary on cars is funny and wrong.

        I do like Apple products and also agree on the better user experience, more polished apps, more organized market and that a lot of people has bought an iDevice. But, this is not the point here. Apple could sell millions of iPad minis. I have my doubts because the SO has no evolution, it has the same deficiencies from three or four years ago. And I'm not sure the people's patient will be infinite. Ask Nokia.

        A simple example. iPad and iPad mini don't have GPS in the WiFi. Nor USB in, neither HDMI out, and its Bluetooth only chat with Apple. Both limitations are imposed by Apple on its customers. I doubt that Apple will be able to do that for ten years more. Maybe less than five. I expect less than three.
        My next tablet: not an Apple's. It is a shame, as I was expecting a price drop in iPad 2 and eager to be convinced on the iPad mini wifi. But the limitations are too much and I can get more for a cheaper price.
        Erasmo Cepeda
    • Only time will tell

      With it s palm friendly size n weight while retaining d experience of d full sized ipad, I believe it wl b the best selling tablet from Apple s stable
      Rohan Pokhare