'Mini' iPad 3 and a 'cheap' iPad 2 - Don't bet on it

With the expected unveiling of the iPad 3 less than a week away, it is now silly season for iPad-related rumors and nonsense.

The pick of the crop today comes to us via Digitimes.

• Apple likely to begin production of 7.85-inch iPads in 3Q12, say sources ‘Makers in Apple's iPad supply chain have started delivering samples of 7.85-inch iPads for verification, with volume production likely to begin in the third quarter of 2012 at the earliest, according to industry sources.'
• Apple expected to unveil 16GB and 32GB iPad 3 as well as 8GB iPad 2 on March 7 ‘In addition to iPad 3, Apple is also expected to unveil an 8GB iPad 2, allowing the tablet PC series to cover different segments and to defend against Windows 8-based tablet PCs, the sources noted.'

Oh, where to begin the debunking?

We can just dismiss the 7.85-inch iPad story straight away with just pure logic. Why would Apple make an iPad that's less than two inches smaller than the current offering? That just doesn't make any sense. A 7-inch tablet would make some sense (since it would complete directly with Amazon's Kindle Fire). But even that doesn't make much sense given that small tablets are not for everyone, because the user interface elements are too small and content isn't optimized for a screen that's bigger than a smartphone yet smaller than the iPad.

Also, can someone please tell me what's so special about 7.85 inches?

OK, but what about the 8GB iPad 2 rumor? After all, Apple's had quite good success with selling the older version of the iPhone at a cheaper price. But there's one thing that Digitimes (or its source) didn't factor into the equation, and that is that the older versions of the iPhone are only cheap because the carriers subsidize them.

An unsubsidized iPhone 4 still costs $549, but if you buy it from AT&T, Sprint or Verizon, it costs you $99. The same is true of the ‘free' iPhone 3GS. Buy that one from AT&T and it is $0, but buy an unlocked one and you'll pay $375.

Unless Apple somehow plans to get the carriers on-board to subsidize the cost of an iPad, then there is going to be no such thing as a cheap iPad 2 because there won't be enough of a price gap between the two devices. Even if the storage is dropped to 8GB, this makes little difference since the difference in supply chain costs between 8GB and 16GB of NAND flash storage is going to be less than $10.

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