Tiny iPads: Big Potential or Fat Chance?
The persistent rumor that Apple (Nasdaq: AAPL) will produce a 7-inch iPad garnered some buzz Tuesday when a loose-lipped Samsung “official” revealed that the mini tablets would start shipping later this year.
The unnamed official with Samsung Electronics made the disclosure about the so-called iPad mini in a report that appeared in The Korea Times.
Talking about the size of Samsung’s business with Apple, the official pegged the current contract with the American company at US$9.7 billion but added that could rise to as much as $11 billion “by the end of this year as Apple is planning to release a smaller iPad, probably with a 7.85-inch screen,” the Times quoted the official as saying. Apple also plans to sell more MacBook Air laptops using Samsung’s solid state drive, the source reportedly said.
Coming in 3Q12
Rumors about an iPad mini have been swirling for months. They received a boost during the holiday season, sparked by the success of Amazon’s (Nasdaq: AMZN) 7-inch, Android-based tablet, the Kindle Fire.
They continued right up to the launch of the third-generation iPad this month. They culminating just days before the much-anticipated announcement of the tablet’s new edition with disclosure of a report from Samsung Securities, which is not affiliated with Samsung Electronics, that included a reference to an iPad mini launch scheduled in time for this year’s holiday season.
In the report dated Dec. 8, 2011, which primarily focused on the market for AMOLED displays, Samsung analyst JungHoon Chang wrote that Apple plans “in 1Q12 to launch the iPad 3 and in 3Q12 a new 7-inch product temporarily referred to as the ‘iPad mini.'”
Apple did not respond to our request to comment for this story. Samsung America declined to comment.
Kindle Lights Fire Under Apple
While there are pros and cons for Apple launching a pint-sized iPad, analysts interviewed by MacNewsWorld argued that the odds were against the introduction of a mini tablet. A much-cited reason for cooking up an iPad mini would be to tap into the latent demand for lower-priced tablets exposed by Amazon when it introduced its Kindle Fire.
“The success of the Kindle may have shown them that there is a market for that size of a product,” he told MacNewsWorld.
Holding Line on Pricing
However, Baker doubts that Apple wants to undercut its present pricing structure with a low-cost tablet. “It would give lots of customers ways to trade down in terms of pricing, and at this stage in the development of the market, that’s not something Apple would push for,” he reasoned.
Apple, he added, has also been critical in the past of 7-inch tablet displays. The company has held that they are too small for fulfilling the potential of the device.
Indeed, at an Apple earnings call in 2010, deceased Apple cofounder Steve Jobs noted, “One naturally thinks that a 7-inch screen would offer 70 percent of the benefits of a 10-inch screen.
“Unfortunately, this is far from the truth,” he continued. “The reason we won’t make a 7-inch tablet isn’t because we don’t want to hit a lower price point; it’s because we think the screen is too small to express the software.”
Regional Pressure for Mini
If Apple were to introduce an iPad mini, it wouldn’t do so because it wants to wrestle with competitors in the price trenches, according to Tom Mainelli, an analyst with IDC.
“If I were to speculate on why Apple were to bring out a 7-inch product,” he observed, “it would be more about reaching users in markets such as Japan, where the 10-inch size is considered too big.”
In the U.S. and in parts of Western Europe and in other places where the iPad has been extremely successful, he continued, people have found a way to fit it into their lives — at home, at a hotel, in the office.
“In some regions and in some cultures, a 10-inch product is too big,” he maintained. “They can’t seem to figure out where it fits in their lives. If Apple were to launch a 7-inch product, it would be to target some of these regions where the form factor would be more desirable, and not because they’re trying to match Amazon’s price point.”
As to this latest rumor about the elusive mini tablet, he opined, “We really don’t know if this is any more reliable that any of the other rumors.”