I'll believe the iPad Mini when Apple throws a launch event

I'll believe the iPad Mini when Apple throws a launch event

Summary: Everywhere you turn on the web you run smack into another rumor about a small iPad that Apple is readying to compete with the Kindle Fire and Nexus 7. I can't come up with a single reason Apple needs one.

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ipad-and-mini-ipadThe web is always rife with rumors, and none get as much traction as those about Apple. The rumor of a small, 7-inchish iPad is one that just won't die. It keeps appearing in all the right places, supposedly gleaned from information from those unnamed sources "in a position to know". Sorry, while I would probably buy a small iPad I don't buy the rumors that Apple is actually going to produce one.

The rumors started almost as soon as the iPad originally hit the market. I can remember exclusive reports that the Asian supply chain was confirming an "iPad Mini". Those were over a year ago and still no little iPad.

What makes the iPad Mini such a compelling rumor goes back to Steve Jobs and his insistence that Apple wouldn't make one. He stated that a smaller (think 7-inch) iPad wouldn't give a good user experience, and that was that. Folks now seem anxious to see if the post-Jobs Apple will deviate from his views, and this is a way to see that happen.

Sorry folks, while a small iPad would probably sell OK, I don't see producing one to be in Apple's best interests. The company doesn't normally enter existing market segments with the intention of competing on design and pricing. Apple normally creates new markets, defines them to fit products and then owns them. That's how they maintain such a high profit margin on products.

Competing in a low margin, highly competitive market just doesn't fit the Apple way. In discussions I've held with very smart people familiar with the tech industry, I've been told that an iPad Mini would be a defensive strike by Apple in the tablet sector now ruled by Amazon with the Kindle Fire and soon Google with the Nexus 7.

The problem with that logic is that Apple doesn't do defensive strikes. If it wanted to go after the Nexus 7 it would have launched a small iPad back when the iPad 3 was announced, long before the Nexus 7 was a public twinkle in Google's eye.

I also find it hard to believe that Apple would enter an existing market with such a low profit margin. Both Google and Asus, the maker of the Nexus 7, have stated that the $199 Nexus 7 is a break-even device. While Apple could certainly produce an iPad with similar features at that price and actually make a profit due to its tight control of the supply chain, the margin would still be small.

A small margin is not what Apple goes after with a new product under any circumstances and I don't see them starting now because of tablets running Android. No, Apple will be content to keep churning out high-margin tablets and laughing all the way to the bank.

I have no inside information leading me to my belief that there will be no iPad Mini. So like those now claiming one is imminent, I have a 50/50 chance at being right about it. I'll take those odds.

Image credit: Brooke Crothers/CNET

Topics: Apple, Amazon, Android, Google, iPad, Tablets

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17 comments
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  • The one flaw is...

    While I agree with most of the points of the article, it seems like the 7" "entry level" type tablet is the only segment where any tablet not made by Apple has gained any traction at all. While it may be low margin and Apple may not be first to market, it represents a threat.

    A platform that can offer a smart phone, tablet and desktop/laptop that all feed off the same ecosystem is utopia for the platform maker. It may be worth it to Apple to do it just to prevent any further Android growth in the tablet market before Android's marketshare becomes relevant.

    Apple could address the low margin a few different ways. First, just because Amazon, Google and other Android OEMs are targeting the $199 price point doesn't mean Apple has to. $300 would still probably get them a large share of the 7" market and not necessarily cannibalize the traditional iPad sales.

    Second, they could go the route of carrier subsidies and list it as $350 without a carrier agreement, $250 or even $200 with. Don't forget, Verizon appears to be coming out with shared data plans, so getting an iPad on such an account could cost as little as $10/month (amount of data not withstanding). Or, Apple could be negotiating something completely different with the carriers. They already have no contract month-to-month in play on iPads, so what if they did something else outside-the-box? Like an app where you simply buy 4G data in small chunks through the App Store, with a minimum commitment over the course of a term (in trade for getting the subsidized price). Imagine if you generally use your tablet on wifi, but happen to be somewhere without wifi. You might think twice about activating data for the month for $20, but you might not think too much if you could get enough data for the day or even a couple hours for $5 or less. May not get you much in terms of streaming, but it would get you enough to check/send some e-mail, check your social networking, upload some pics, etc. while you're in wifi exile.
    TroyMcClure
    • A *premium* 7-inch (nominal) form-factor tablet

      Agree that there's no gain for Apple to go head-to-head on pricing with the Amazon Fire, Nexus 7 and Barnes & Noble Nook tablets. These tablets are in a race downward.

      Apple has a pricing slot open at $299 U.S. for a 7-inch tablet and they have a bit of room to raise it, perhaps as high as $349 U.S. (The iPod Touch starts at $199 U.S. and last year's iPad starts at $399 U.S.) This would provide Apple with a bit of a margin that they are used to with hardware. In addition, they can sell last year's 7-inch tablet with a discount, maybe a $50 discount, relative to the current 7-inch model.

      A relatively low-priced 7-inch tablet will draw some customers up from competing 7-inch Android tablets. In addition, it will also very likely cannibalize the 10-inch iPad sales to an extent. But, so what? Apple still gets their hardware margins and they get more customers buying content and paying for services.
      Rabid Howler Monkey
  • Typical

    Typical. Apple's one-size-fits-all mantra has always been it's biggest flaw. How many more iPhones would Apple sell if they had a model with a keyboard or with a bigger screen. Would Android even exist if Apple provided more variety in their hardware? It surely wouldn't have the market share it has now. The same can now be applied to tablets, 7 inch tablets are very handy. How many less Nexus 7 or Kindle Fires would if Apple provided a similar device?
    clcrockett
    • Selective memory syndrome

      I guess your one size fits all theory also applies to Apple's iPod family of products. Or the one size fits all MacBook Airs. Or even their one size fits all policy covering software products - for example - iLife and their Pro counterparts.

      Your agrument would make sense if it fit the observable facts.
      kenosha77a
    • Erm ...

      Before I begin, let me state that what I have to say applies not only to Apple, but to other companies such as Lenovo.

      I actually prefer Apple's approach to most other OEMs. Apple picks a small number of products and invests 100% of their effort into making those the BEST products they possibly can. And the results speak for themselves. Their products may not appeal to everyone, but they're damned good products.

      Other OEMs, whether in the PC business or phone business, tend to build lots and lots of half-baked models, investing only enough resources to ship them out the door and prepare for the new one. That's been Dell and HP's strategies for years. Same with phones ... how many different Android models are there?

      You have two types of businesses here. The first is a company which sets out to build an amazing product, knowing that not everybody will end up using their device. Their devices are extremely well designed, last a long time, and really perform very well.

      The second is a company which chases every possible market opportunity, with the hopes that simply having a huge user base is enough to equate to quality products. Their devices are often shoddily made, and have limited support. Consider the RAZR line. The first model was obsolete within months of release.

      There's an old story that the head of Nike approached Steve Jobs and asked him what his secret was. Steve said, "Look, you make a lot of great products that people really want. But you also make a lot of crap. Stop making the crap."

      It's really as simple as that.
      lapland_lapin
    • You are so right

      That one size mentality has sure hurt them. Just think, they could be like most of the Android OEMs producing countless models and struggling to make a profit. Sure they don't offer as much variety but that is absolutely why they get the margins they do.
      non-biased
  • Agreed, James.

    If the rumors of the 7-inch LCD component are true, I think it's more likely a part used in a TV remote or some other hardware-specific application rather than a full-blast iPad.
    Userama
  • I'll believe the iPad Mini when Apple throws a launch event

    Apple already has an iPad Mini, its called the iPod Touch.
    Loverock Davidson-
    • Naw .. you are referring to the iPad Micro (which is the iPod Touch)

      Almost, Loverock. BTW, I just surfed the web using my iPod Touch I received this past Holiday season. It's retina display made reading the "micro sized" text possible on certain web sites.

      BTW, I don't normally use my iPod Touch for web surfing. But today, I decided to restore it to it's initial factory state and maximize it's storage memory for mp3 files and I was curious to see if everything worked as before. It did, naturally.
      kenosha77a
  • Apple in the 7" market

    First, Jobs is dead, so his prior pronouncements against a smaller form factor are moot. Second, IF (and it's a big if) Apple decides to compete in this market segment, I would not expect them to do so on price. A $299 iPad Mini with 16gb of RAM would be competitive, since it would come with the entire iTunes ecosystem. Amazon, B&N, and Google bring their own stores, but none rival Apple's for breadth and depth. Still, Kendrick's 50/50 odds sounds about right. I'm much more confident that a 2nd generation Kindle Fire and Nook Color will appear in response to the Nexus 7 challenge in the next 90 days.
    S_Deemer
  • Incremental supplies == incremental sales

    Apple has said publicly that they are supply-constrained on the 10" iPad. It's likely that the item they can't get more of is 10" retina displays. But it may be that there are fabs available that could make 7" retina displays, and that Apple could acquire some of that capacity. If so, those would be incremental units, not anything cutting into the current product. That would be especially true if -- as many here suggest -- Apple prices the 7-incher so it produces the same margin as the 10-incher. Whoever these geniuses are who believe that 7" means $199, Apple can safely ignore them if the units are ones that wouldn't be sold at all otherwise.
    Robert Hahn
  • No markets are out of bound for Apple

    I would certainly agree Apple is in fact the type of company that would enter existing markets. How many times have we heard the comment Apply was not the first in this market?

    Take the iPod, iPhone, iPad and Mac Air. These are all devices that entered an existing market place. MP3 music players, smart phones, tablet computers, and Note Book PCs were all their before Apple entered as a competitor. The point is Apple just did it in a much better way by leveraging their much lambasted but truly valuable ecosystems, which others did not have and brought us products that were not gimmicks but truly useful devices.

    Apple just recognises that if you produce poor quality products for short term profit you just fragment the market places with competing offerings. To define a truly new platform that does improve peoples use of our digital world, you do it with great design, great products, and emotional desire. It is something I think is still missing even from the likes of Samsung. Samsung TVs may look nice for a couple of months when new, but they date quickly, and I would say the same with their phones. They all look well… dated… even the Galaxy S III.
    charles_mo
  • Agree, But How About A Bigger iPod Touch?

    yes, there is no way a downscaled 7" iPad OS UI can be as good as the real 10" thing. and Apple doesn't do second rate products.

    but - the iPod touch, as one noted above, is already the real "iPad mini" at 3.5". upscaling its iPhone UI to, say, 5.5" would produce a great new Apple device. better for video and games for sure. easier web browsing and so on. still fits many pockets and ultra thin. room for a bigger SSD and bigger battery. the only trade off would be losing the retina display resolution. but the price would be $250 or less.

    so that's my bet.
    AlfieJr
  • I'm sure Apple spent a lot of time thinking about form factor...

    After all, they created the damn category, and Steve was about one thing: the user experience. No, Apple will simply continue releasing faster, better tablets at the same price points, keeping choice back-catalog versions shipping at lower prices, and continue to own the space.
    Geedavey
  • Always rumours

    Apple is the king of hype because it gets people hyping their products 6+ months before they are rumoured to be arriving.
    This "mini" still hasn't been validated by Apple [but that's Apople - it's part of the hype machine].
    As mentioned, the late Apple gadget god, Steve Jobs, didn't want a smalkler iPad as recent as a couple of years ago. Would Tim Cook decide to go against his mentor/boss and release one anyways? Jobs didn't things according to a plan. If he didn't want a "mini" he had reasons [of course cutting into the more profitable 10" would be one reason].
    Gisabun
  • Why post-Jobs?

    Jobs said:

    People don't want to watch videos on an iPod screen
    People don't read any more, so no eBooks

    Steve "Barnum" Jobs was a great show man, hidding what he was doing behind negative words, before reversing his stance, as he released exactly what he said he wouldn't do or what he said people didn't want, and selling what he was poo-pooing 6 months before as the most magical and briliant thing ever...

    That said, Apple has never joined the "race to the bottom", so if they did release a 7" tablet, it wouldn't compete with Google or Amazon on price, it would have an "Apple" price tag.
    wright_is
  • Apple doesn't have a choice

    The money is going to be made in the content stores. The hardware margins are expendable. Apple isn't going to stand by and watch the Google Play Store and the Amazon Market overshadow iTunes, which they will if Android takes off in tablets like it did in phones.
    AnalogJoystick