As we remember, Wall Street Journal have predicted for a long time that Apple was going to produce a smaller and less expensive version of its well-known iPad. Some analysts said that this step might influence Apple`s margins negatively, but at the same time it will not permit its rivals to dominate an essential computing segment.
Though a few days left before the event, an Apple spokesman refused to comment, but tech blog AllThingsD reported earlier on Friday that Apple would surely release the mini iPad . The consumer device company wants to unveil it at a major October 23 event, said the source, who chose to remain unknown to the public. The event will take place only days before Microsoft Corp launches Windows 8 and its new Surface tablet on October 26.
As we can see, an iPad Mini will directly compete with e-commerce company Amazon’s Kindle Fire HD tablet and Google’s Nexus 7. Because both devices have 7-inch screens and sell for $199. Thus, it will be a real struggle for Apple, as the first Kindle Fire seized about a fifth of the U.S. tablet market and the Nexus 7, produced by Asustek Computer Inc, has also been pretty successful with the tablet selling like hot cakes just after release.
One Wall Street analyst ,when visited component suppliers in Asian, saw the iPad Mini that was dubbed by the media.
“We actually had the opportunity to play with a pilot iPad Mini used by one of the vendors,” Topeka Capital analyst Brian White said. “This 7.85-inch iPad Mini fit our hands like a glove and we were easily able to tuck the device in our sport coat, offering consumers a more mobile iPad experience for certain use cases.”
Still there are different expectations, concerning a smaller iPad. For instant, late Apple founder Steve Jobs mocked at the 7-inch screen as cumbersome for tablet applications, he said that the device shoulв come with sandpaper so that users can file their fingers to use them.
And as Reuters reports, Internet chief Eddy Cue argued there was a market for a 7-inch tablet and that Apple should have one. The email, sent in early 2011 to top Apple executives, said Jobs had warmed up to the idea.Apple’s fiscal fourth quarter financial results are scheduled to be released on October 25, two days after the event, offering analysts a rare opportunity to grill executives about a new product just after details are made public.
But the most common view is that this smaller version could be a risk to Apple’s industry and lead margins, especially taking into account that neither Amazon nor Google has made much money from the smaller tablets.
Google has said that its $199 Nexus 7 is being sold at cost and has no profit margin.
Apple earned gross margins of 23 percent to 32 percent on its U.S. iPad sales between October 2010 and the end of March 2012 and the company’s margins on U.S. iPhone sales are almost double those of the iPad, averaging between 49 percent and 58 percent.
According to Revenue, Sterne Agee analyst Shaw Wu said: ”If Apple prices the smaller tablet between $299 to $349, it could maintain the current margins. The biggest cost in a tablet is the display,” he said.
Wu continued: “On a mini, the display will be a bit cheaper. If the tablet is priced below $299, Apple could still maintain a bearable margin if it offers 8 GB of storage instead of the minimum 16 GB storage it has in the current iPad.”