What Happens If You Shrink an iPad?

Ticonderoga Securities analyst Brian White is fueling speculation that Apple (Nasdaq: AAPL  ) will launch what's being referred to as an "iPad mini," after visiting with component suppliers in China and Taiwan. But despite the "mini" moniker, the shrinkage doesn't actually refer to the physical size.

A year ago, the late Steve Jobs had referred to the batch of 7-inch screen tablets, mostly running Google (Nasdaq: GOOG  ) Android, as "dead on arrival," noting that the form factor is too big to compete with smartphones yet too small to be usable as a tablet. Like most of Jobs' visions, he has been proved right while non-iPad tablets with 7-inch screens, like Research In Motion's (Nasdaq: RIMM  ) PlayBook, predictably fall short.

The only 7-incher that stands to make it big is Amazon.com's (Nasdaq: AMZN  ) new Kindle Fire, which comes with an aggressive $199 price point -- less than half of an entry-level iPad. The "mini" would refer to a lower entry-level price, potentially in the "mid-to-high $200 range," according to White. He predicts that it will show itself in early 2012 with an iPad 3 in tow shortly after, probably in the second quarter.

Apple would have to make a lot of sacrifices to get costs down to that threshold. The real question is whether it would be a good strategic choice.

Apple's brand has always commanded premium pricing, so taking out features to move down the price scale just to compete with Amazon seems out of character. The company's lineup is already pretty full, with all the major price points covered. The iPod touch is a smaller iPad for all intents and purposes, and I've always thought Apple should redub the device the "iPad nano" because of the similarities.

Product Family

Onboard Storage

Screen Size

Price Point

iPod touch 8 GB 3.5-inch (diagonal) $199
  32 GB 3.5-inch (diagonal) $299
  64 GB 3.5-inch (diagonal) $399
iPad 2 (Wi-Fi only) 16 GB 9.7-inch (diagonal) $499
  32 GB 9.7-inch (diagonal) $599
  64 GB 9.7-inch (diagonal) $699

Source: Apple.

There's not really a lot of room here to squeeze in a cheaper iPad without encroaching on iPod touch territory. The Kindle Fire has distanced itself from the iPad to the extent that the devices target different market segments. I can see why some analysts think the move makes sense, but I think Apple will do just fine without an "iPad mini."

Fool contributor Evan Niu owns shares of Apple and Amazon.com, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Apple and Google. Motley Fool newsletter services have recommended buying shares of Apple, Google, and Amazon.com and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 13, 2011, at 10:08 PM, H3D wrote:

    That $199 Touch has the same pixel count as the Fire. It's more compact, but all round better.

  • Report this Comment On October 13, 2011, at 10:18 PM, TMFNewCow wrote:

    @H3D,

    Great observation about the pixel count, I hadn't noticed that one. I'll take the Retina Display's 326 ppi over the Kindle Fire's 169 ppi any day, personally.

    -- Evan

  • Report this Comment On October 14, 2011, at 12:41 AM, peto3 wrote:

    How about a 7" iPod touch Maxi ...

  • Report this Comment On October 14, 2011, at 7:01 AM, AirForceGuy wrote:

    Why an iPad mini?

    An iPad mini would just degrade the iPad product line, the iPad has higher quality standards.

    Why not just make a iPod Touch XL (Extra Large for those who want a bigger display?

    You don't need a high def camera or a dual core for just an iPod.

    Nice and cheap low end iOS machine, just don't use the iPad name.

  • Report this Comment On October 14, 2011, at 9:01 AM, lucasmonger wrote:

    I like both the iPod touch XL (5-6 inches) and the iPad XL (13-15 inches), but why not an iPad XXL (20 inches that replaces the placemat on your desk (of course, you shouldn't write on it).

  • Report this Comment On October 14, 2011, at 9:35 AM, Jetmac629 wrote:

    Great points, but, unfortunately they're in error. While a full service tablet, with the expectation that it be a workhorse, does have a problem at the 7" form factor -- mainly due to the screen real estate available for a keyboard -- NON-full power tablets have been highly successful at the 7" size.

    Case in point is the Nook Color. the Nook Color is a 7" tablet designed for media consumption, specifically reading, but it also handles movies, games, music, and other applications. You can check your email, your facebook, or your twitter. You can surf the web. it's sold millions of copies and is still, a year after launch, the most successful Android "tablet" on the market (a fact frequently overlooked by the tablet market analysts).

    If you want a laptop replacement, or near laptop replacement, you need a full size tablet with an approximately 10" screen size. That's just a factor of data entry methods and the size of human hands. But, if you just want to surf the web and consume media, a 7" tablet is an extremely ideal screen size.

    The Nook Color and the Kindle Fire have specifically stated that they are not tablets -- they are media devices, just a step up from an e-reader.

    The Nook Color has already shown that this type of device can be very popular and very successful. I think the Kindle Fire will do quite well, especially being tied to Amazon's movie and music services in addition to it's Kindle ebook repository.

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