Do We Really Need an iPad Mini?
Apr 18th 2012 9:07PM
Updated Apr 18th 2012 9:08PM
No matter what Apple (NAS: AAPL) does, consumers always seem to want more -- or, in this case, less.
Rumors of a smaller iPad are making the rounds again. The iPad Mini would feature a smaller screen than the current 9.7-inch tablet that Apple currently has on the market.
A report out of China claims that Apple will ship 6 million of these smaller tablets during the third quarter. The iPad Mini would come with a 7-inch screen, but copying the size of the Kindle Fire doesn't mean Apple would be targeting Amazon.com's (NAS: AMZN) $199 entry-level tablet with this move. The original report claims that the method to Apple's shrink-sized madness would be to have a low-priced tablet ready to compete when Microsoft (NAS: MSFT) unleashes the tablet-friendly Windows 8 later this year.
"From our supply chain work, we have come across evidence of such a device since 2009 and we believe it makes strategic sense for AAPL to expand its iPad family," Sterne Agee analyst Shaw Wu wrote, addressing the chatter.
However, Wu doesn't believe that its release is coming anytime soon.
Don't start camping out for your new iPad Mini
It's easy to see why Wu is skeptical about the specific timing suggested by the original report. Microsoft hasn't even gone public with Windows 8 release dates, and it remains to be seen what kind of attack will be coming when Microsoft's hyped tablet-centric operating system finally does ship.
Microsoft has seen PC sales stall over the past year, and its smartphone push got off to an inauspicious start last week with the buggy Lumia 900.
Microsoft is a smart company, but there's little reason for Apple to be quivering in the corner. Mr. Softy hasn't really been much of a menace to Apple in recent years.
The 6-million-holler plan
And what's the deal with having Apple ship just 6 million of these iPad Minis, according to the suspiciously specific report? Apple sold 3 million of its latest iPads just over its debut weekend. If Apple is able to put out a 7-inch iPad at a price point below $300 -- setting itself apart from the $499 new iPad and the $399 iPad 2 from last year -- you can be sure that Apple will be selling far more than 6 million of them.
Apple doesn't do price wars. It does respond to the market, but not all that often. It's not as if the modest success of the Kindle Fire is getting in the way of blowout iPad sales. Apple just doesn't have to fix what isn't broken.
If it ever truly needs to stand out in a price war, it simply needs to start talking turkey with wireless carriers AT&T (NYS: T) and Verizon (NYS: VZ) on a subsidization plan shackling 4G iPads to two-year data-plan contracts in exchange for significant price cuts.
Until the Kindle Fire managed to sell millions of tablets this past holiday season, the 7-inch tablet was a dud. It would be hard to imagine that the Fire would succeed at a higher price point, and most analysts believe that Amazon is actually selling the hardware at a loss.
There's really no need for Apple to dive in and validate the 7-inch market. If folks want something smaller than an iPad, Apple's way ahead of you. Buy the far cheaper iPod Touch.
There may come a time when smaller iPads may be necessary, but Apple stands little to gain by playing small ball this year. Going the other way on the sizing grid by hitting consumers with an Apple high-def TV makes sense. The iPad Mini -- for now -- is nonsense.
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At the time this article was published The Motley Fool owns shares of Microsoft, Apple, and Amazon.com. Motley Fool newsletter services have recommended buying shares of Microsoft, Amazon.com, and Apple and creating bull call spread positions in Microsoft and Apple. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He owns no shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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