Do We Really Need an iPad Mini?

No matter what Apple (Nasdaq: 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 (Nasdaq: 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 (Nasdaq: 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 (NYSE: T  ) and Verizon (NYSE: 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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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.


Read/Post Comments (11) | Recommend This Article (4)

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 April 18, 2012, at 9:25 PM, artlaz wrote:

    Saw a woman on a plane with her young daughter sitting next to her. She had an iPad in her hands and the daughter had a Kindle Fire. The Kindle was the right size for the child. That's enough reason right there for a smaller iPad.

  • Report this Comment On April 18, 2012, at 9:33 PM, daveshouston wrote:

    I think the 7" iPad would be a nice addition. It fills a gap between the iPod Touch and the iPad.

    It would have a price point that could be problematical for Google and Amazon.

    Apple currently owns almost the entire tablet market. The only noteworthy competitor success is on the low end where Apple doesn't have a product. They need to shut that door.

  • Report this Comment On April 18, 2012, at 9:54 PM, applefan1 wrote:

    I personally wouldn't buy one, but that doesn't mean they are a viable product to sell. Personally, if the price was right, the weight was right, I would buy a 13 or 15 inch model that was big enough to have a full sized keyboard and more viewing area.

  • Report this Comment On April 18, 2012, at 10:02 PM, Gridlocked wrote:

    At 7 inches the mini could sit on my dashboard and replace my GPS. I can take it off the dash when I need.

    The iPad is too big for that.

  • Report this Comment On April 18, 2012, at 10:03 PM, fatmonk wrote:

    is it an iPodPro? or iPocket? pocket Game devices(iPhone is little to small for finger action game, Professional on field tools, pocket book readers, they want to have one to carry around.

  • Report this Comment On April 18, 2012, at 10:05 PM, tychicum wrote:

    There is an iPad mini. It is called the iPod Touch. DOH!

  • Report this Comment On April 18, 2012, at 11:04 PM, peanutgalerygeek wrote:

    Probably a feint. They have enough money for 700 fake projects and probably do that all the time as a way to test potential suppliers, project managers, and engineers.

    A kid can easily handle a regular sized ipad. I see it all of the time.

  • Report this Comment On April 19, 2012, at 12:09 AM, gslusher wrote:

    @peanutgalerygeek:

    I've seen many kids with iPads, too, including 3 & 4-year-olds.

    Some points to consider:

    1. We don't know how many Kindle Fires Amazon sold--ever. Amazon doesn't release sales data, so all we have are wild-eyed guesses. The guessers can't even use sales at other outlets, as Amazon surely sells most of the Kindle Fires.

    2. Even with guesses, what are sales of the Fire like NOW, after the holiday?

    The Fire is listed as "In Stock." EVERY model of the new iPad on the US Apple Store is listed as "ship 1-2 weeks." (There are iPads in stores, of course. The iPad 2 is listed as in stock.) Given that Apple has probably ramped up iPad production, this implies that iPad sales continue to be "brisk" (at the least).

    Another possible indicator of trouble for the Fire: on Amazon's site, 16+% of the 16,562 reviews (as of now) are 1- or 2-stars--almost 10% are 1-star. That's extraordinary for a popular device. Sure, over half are 5-star reviews, but that should be expected, as a lot of people give 5 stars to almost anything. (I expect that a lot of those haven't compared the Fire to an iPad, either.) The 1-star reviews may represent possible returns plus negative "gossip" that could hurt Fire sales.

    All in all, the Fire may turn out to be a bit of a fizzle. That doesn't translate into much "pressure" on Apple.

    As for Windows, we'll have to wait and see. Microsoft has a history of delaying the release of new stuff after hyping it to the sky.

  • Report this Comment On April 19, 2012, at 5:31 AM, H3D wrote:

    Most of these rumours of new devices are simply wrong. However suppose this device really exists.

    That doesn't make it an iPad. That depends on the software Apple release it with.

    Maybe it's a dedicated games console. Maybe it's the default controller for the rumoured iTV, or for a new iRobot or the inevitable iHeatingManager console.

    While each of these might be superceded by an app on iPhone or iPad, each of them might have a different natural size. The contractors building them could only guess what they were. They wouldn't know.

  • Report this Comment On April 19, 2012, at 11:29 AM, lucasmonger wrote:

    Imagine the preschool through grade school market penetration if Apple were to sell it as iPad kids (instead of mini). Surely even adults with small hands might prefer it. Personally, as a 6' 3" male with huge hands (who also sport Apple's smallest MacBook Air 11"), I prefer the regular sized iPad. Conversely, people with bad vision might want a 15 inch version.

    Apple is an interesting company. They almost never want to be in the lowest cost market as evidenced by their absence from the netbook market and the fact that their cheapest laptop starts at $999. On the other hand, the iPod shuffle is a low priced device used to get people hooked and hopefully get them to upgrade to a iPod nano or iPod touch. I don't think Apple will go smaller with the iPad unless they put some sort of spin on it to make it compelling without cannibalizing their 10 inch iPad margins. I'm sure they're watching Kindle Fire sales carefully and may be forced into a lower priced offering, but I'm happy to pay $499 for the iPad without considering the Android alternatives (as with most of the consumer base). If Apple made it $100 cheaper, they'd reduce their revenue and possibly some profit. If they made it only $50 cheaper, then maybe people will just purchase the right sized iPad for their hands rather than buy smaller only to save money.

  • Report this Comment On April 19, 2012, at 11:34 AM, Alexa225 wrote:

    I think an Ipad Mini would be a great addition to Apple's Ipad range.

    I desperately want a 7 inch tablet, but not convinced by anything on the market thus far. (The Kindle Fire isn't available in the UK although there's been much clamouring for it!)

    The main benefit of a 7 inch tablet is its portability - I could carry it in my handbag. In fact, lack of portability is what's stopped me buying an Ipad to date.

    I could also use it as a Kindle. (The non-colour Kindles available in the UK have never appealed to me and my phone screen is a little too small to read books comfortably.)

    Bring it on Apple!

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