Mini iPad - the numbers just don't add up
Summary: A mini iPad might make sense if iPad sales were flagging, but there's nothing to suggest that Apple is having a problem selling full-sized iPads.
Lots of speculation today that Apple is working on a mini version of the iPad, a device that, if the rumors hold true, will cost anywhere from $249 to $299.
The story seems to have originated on Chinese net portal NetEase. As well as the low price tag, the rumored device has a 7.85-inch screen running at 1024 x 768 -- same as the first- and second-generation iPads -- and there will be an initial 6 million units available at launch.
This mini iPad rumor isn't new, there's just a little more "detail" this time around. I still don't understand the logic of why Apple would make an iPad that's less than two inches smaller than the current offering. 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.
But screen size issues aside, the numbers don't add up. Take a look at the bill of materials estimate for the iPad 2 and iPad 3 drawn up last month by iSuppli Research:
Before we go on, let me remind you that these figures are estimates, but I believe that they are close enough for our purposes here.
Now take a look at the cost of a 16GB Wi-Fi iPad 2. It's down as a shade over $245. We can take this as a starting price for the mini iPad. A smaller iPad would have a smaller screen, smaller touch screen and, one would assume, a smaller battery. But how much realistically can these smaller items shave off the price? Even shaving $40 off the overall bill of materials (BOM) and manufacturing costs would mean that even at $299 the mini iPad would have the smallest gap between BOM plus manufacturing costs of any iPad.
It just doesn't make sense that Apple would release a mini iPad, a device that could potentially cannibalize sales of the more expensive models, at such a poor margins. A mini iPad might make sense if iPad sales were flagging, but there's nothing to suggest that Apple is having a problem selling full-sized (and high-margin) iPads.
My guess is that the $299 price tag is a stab in the dark. With the 9.7-inch iPad 2 now starting at $399, there's not an awful lot of room price-wise to fit in a mini iPad, so $299 will have to do.
The mini iPad is a solution to a problem that simply doesn't exist.
Image credit: iSuppli Research.
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Talkback
There's already TWO "iPad Minis" on the market
Why not
Should they go out and buy 10 Windows desktops instead?
Don't underestimate Apple's sourcing abilities.
Don't think "iPad Mini"
It will appeal to some.
Closer pricing point may hurt kindle and others
iPad mini?
For people who want the size, not the price, Apple could sell iPad Mini at
The UI problem could be solved by implementation of Apple's patent that would scale up UI in the place to where user moves his/her finger -- before the actual touch. There is technology for that (similar to Termenvox), so it is not impossible.
Jobs was not against smaller tablet per se, he was against smaller tablets because these would require "a file" to make fingers twice smaller for UI elements. If this problem is solved, then iPad mini would be fine product.
A Typical Apple Apologetic
So, it would easily solved by giving out a file to file your user's finger down is it?
Please, no, Job was made very clear that "anything smaller than 10 inch is too small"... and he never saw Kindle Fire coming.
5 million Fires versus 65-70 million iPads is "coming"?
And no, Jobs was made very clear that anything less than 10" is too small only because the UI normally would be super tiny. But with Apple's patent (which was submitted in Jobs' time) [b]this UI problem -- that would otherwise require, according to Jobs, a "file" to deal with too big fingers -- will be solved.[/b]
Size
Three words, Adrian: First Mover Advantage.
Right now, Apple enjoys FMA on the iPad, but there is a lot of competition coming down the pipes, and some are already sporting smaller displays and smaller prices. As for your numbers - by your own admission these are estimates (though good ones), and managing materials costs is one place Apple absolutely shines. If any manufacturer is able to find a way to get those numbers down, Apple will be that manufacturer.
The biggest reason Apple would come out with a smaller tablet even in light of temporarily smaller margins (which would likely improve over the next year and a half, as manufacturing ramps up), is that they are aware that the tablet market, like the smartphone market, is nowhere near saturated, and it has many gaps yet to be filled (gaps currently being targeted by Android).
They will make the same play that worked for them with iPods - come out with many similar, but not exact, models at price points that cover most of the gaps in the market while they still have first-mover advantage. The reason for the smaller display has nothing to do with materials costs - it has to do with making the differentiation between the premium model and the "basic" model one that is tangible and easy to spot.
It was all a joke......
Once upon a time...
Selling them as fast as we can make them
I don't see why it's necessary to meet Amazon on price just because your display size is the same. People aren't buying these things by the inch; if they were, the Androids would be selling better.
A 7" device works well as an ereader
Nonsense
iPod Maxi or iPad Mini
Instead, I've got an HTC Flyer and am eyeing the ASUS Transformer 300 with interest.
It's unfortunate, though, that I have to choose between the hardware that best fits my needs, and the more polished and extensive App ecosystem.
You're thinking is off....
This year we're going to see significant low priced tablet launches, let by the Nexus tablet & new Kindle Fire. These are going to have an even more significant impact on the iPad's market share and may impact analyst estimates, and hence, stock price.
Now, Apple's decision is to maintain volume growth at lower margins or hope the volume growth doesn't slow down too much at current margins.
I have an article somewhat alluding to this here - http://www.tech-thoughts.net/
Mirasol screen...
Doesn't need to be cheap