Would an iPad Mini Take a Bite Out of Apple?
Both The Wall Street Journal and Bloomberg report that Apple is readying a smaller version of its popular iPad. Some have questioned whether an iPad Mini would confuse consumers or perhaps "tarnish the brand" . Former Apple CEO Steve Jobs, for example, was against the 7-inch tablet form-factor, calling it "dead on arrival."
On a 2010 earnings call, Jobs said, "One naturally thinks that a 7-inch screen would offer 70% of the benefits of a 10-inch screen. Unfortunately, this is far from the truth. ... The reason we
Consumers, however, have proven there is a market for 7-inch tablets, although the iPad continues to dominate the tablet space, with 68% of the market, according to IDC.
Topeka Capital Markets analyst Brian White believes that an "iPad Mini" would expand Apple's reach to price sensitive customers, and notes that some customers would enjoy the convenience of a smaller, lighter tablet. White also believes that the education market would be "well suited" for a smaller iPad.
"Ultimately, we view the potential addition of the"iPad Mini" as a long-term positive for Apple's iPad franchise and necessary to keep competitors from trying to control the lower price point segment of the market," White wrote in his research note. The analyst rates Apple shares "buy" with a $1,111 price target.
There's still plenty of skepticism from consumers on an iPad Mini. Twitter user rigso tweeted that he wouldn't buy one, but others might. "I know people who can't afford regular iPad and most likely would. Think mini iPad will be a winner," he wrote. Locallylove, MillarAllan, BostonSportsBum and TxbetaZesty all tweeted they wouldn't buy an iPad Mini.
There's always the issue of self cannibalization, though. Apple has experienced this before, with iPad sales cutting into Mac sales, but never with the same form-factor. White estimates the iPad Mini could cannibalize iPad sales by 10% to 20%, but noted the "the market opportunity could eventually be larger for the 'iPad Mini' given the growth trends in developing countries.
If Apple does indeed come out with an "iPad Mini," this would be a clear sign Apple is deviating from the culture and DNA it had under Jobs, despite CEO Tim Cook saying otherwise. Some shareholders, though, may take some convincing about a scaled-down iPad.