The Only Reason Why the iPad Mini Won't Matter

It's finally coming.

We think.

The blogosphere was all aglow on Friday about the likelihood of Apple (Nasdaq: AAPL  ) finally willing to play small ball with its industry-leading iPad. Sources claim that the world's most valuable tech company will introduce the iPad Mini on Oct. 23, giving it plenty of time to hit the market ahead of the holiday shopping season.

The market's not exactly buzzing with excitement, but give the fine marketing folks at Cupertino some time. Once the details are out, folks will start camping out at a local Apple Store near you.

Then again, what if Apple builds it, and they don't come? As logical as it would seem for Apple to put out a more portable iPad to compete with the glut of seven-inch tablets on the market, it's a battle that Apple may not be able to win.

After all, how do you price these suckers?

The iPad Mini's got a problem
Earlier this year, Apple could've owned this market.

The most popular entry-level tablet was Amazon.com's (Nasdaq: AMZN  ) Kindle Fire. It fed right into Amazon's vibrant ecosystem of digital books, videos, music, and Android apps, but it wasn't perfect. There was no camera. The display was lacking. There were limitations to the 8 gigabytes of storage.

Then again, at $199 it was hard for buyers to complain.

A smaller iPad would've made a killing then, even at a $299 and possibly even a $349 price point.

It's a whole new ball game now.

That Kindle Fire has been updated a bit and slapped with a $159 price tag. The new Kindle Fire HD adds the camera, beefs up the graphics, and doubles or quadruples the storage starting at the original $199 price point.

Just weeks before Amazon improved and widened its tablet line, Google (Nasdaq: GOOG  ) decided to show Android makers how it's done by introducing the Nexus 7 for as little as $199.

Are you starting to see why the iPad Mini is shaping up to be a bad bet for Apple? The product makes sense, but there isn't a single price point that makes sense.

It's a quandary for Cupertino
If Apple decides to match that $199 price point that Amazon and Google are succeeding with, it will come at the expense of the $499 iPad. Why would someone pay more than twice as much for the original 9.7-inch iPad when sacrificing a chunk of screen size can save $300?

Of course, Apple isn't going to price the iPad Mini at $199 or even $249. It would have to sacrifice too many features to boost the value proposition of its full-sized tablet. Sure, it could skimp on the camera (the way it did on the original iPad) or lose the Retina Display. It can shave storage capacity. However, then the iPad Mini would be seen as ridiculously inferior to the comparably priced Kindle Fire HD and Google Nexus 7.

Apple has a problem, and it's that it wants to make a profit on its hardware at the same time that Google and Amazon are willing to set all or below cost. They simply want market share, and as a late entry into the small-sized tablet market, Apple has surprisingly plenty to lose.

Oh, and did I mention that this will all be taking place as this month's rollout of Microsoft's (Nasdaq: MSFT  ) Surface aims squarely at the larger iPad? And if we're eyeing the iPad Mini as a way for parents to hand their young kids a cheaper tablet to play with, can we start having Toys R Us' tabeo tablet in the conversation at $149?

There is no right price for the iPad Mini, and it will be Apple that pays the price for that unanswerable dilemma.

If the iPad Mini is too cheap, the iPad suffers. If the iPad Mini is too expensive, no one will buy it. Skimping on features will make it dead on arrival. Loading too many of the features of its larger sibling will destroy the sibling's appeal.

Are you still excited about the iPad Mini? I'm not -- and I'm a pretty big fan of most things Apple.

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Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, Google, and Microsoft. Motley Fool newsletter services recommend Amazon.com, Apple, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not 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.


Read/Post Comments (29) | Recommend This Article (22)

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, 2012, at 7:56 PM, haysdb wrote:

    There are so many things wrong with this analysis that I hardly know where to begin. An 8" iPad priced at $299 would sell extremely well. It would cannibalize some iPad sales, but probably more iPad 2 sales than iPad 3, and it wouldn't surprise me to see the new iPad replace the iPad 2 completely.

    The new iPad will be super thin, super light, with a 40% larger screen than the 7" Fire and Nexus. The screen won't be "retina," but it will be better (higher pixel density) than the iPad 2, which I have never heard anyone say is poor.

  • Report this Comment On October 13, 2012, at 8:50 PM, BradApple wrote:

    The worries expressed in the article are almost entirely negated by the fact that the iPad ecosystem is vastly superior in size, scope and quality to any other tablet computer's ecosystem. What the author of the article also fails to understand is that there are two sizable groups of prospective iPad Mini customers who have been longing for such a device. One group is the more price-sensitive segment of the market that would very much like to have an iPad but doesn't have the means or desire to spend $500-$800 to buy one. The second prospective customer group is made of up folks who prefer a smaller-screened tablet with a more compact form factor. Once the iPad Mini is released in early November, these two groups of prospective customers will no longer be forced to buy an inferior product from Amazon or Samsung to meet their needs.

  • Report this Comment On October 13, 2012, at 9:10 PM, BlueLens wrote:

    I look forward to a mini, as I use an iTouch. So do many teenagers/young people who can't afford an iPad. I need a larger screen. I read many, many Motley Fool board posts on iTouch using my home wifi connection. The smaller size is good for travel and everyday tucking into my bag. I don't want to bring a $500 iPad when I travel--too risky and too heavy.

  • Report this Comment On October 13, 2012, at 9:24 PM, drjhall wrote:

    It's only 25% not 40%. And how do you know it will be "super thin and super light" compared to kindle and nexus, it is not out yet. And you know that almost nobody can tell the difference if something is 2mm thinner than something else especially the size of a phone or pad.

  • Report this Comment On October 13, 2012, at 9:24 PM, FreeRange1 wrote:

    What nonsense! Really, parents that already own an iPad are going to buy a toys r us tablet for their kids? NOT ONE SINGLE PERSON will do this as they already own all the apps and content for their kids. Same goes for the other players mentioned in this "analysis". Apple has locked in an unbelievably huge customer base that is extremely loyal and has made significant investment into the Apple ecosystem. This fact alone cuts these competitors out of a significant market. Further, Apple still dominates the growing demand within the tablet market, both in purchases and intent. That is not going to change in the near term.

  • Report this Comment On October 13, 2012, at 9:59 PM, playForever wrote:

    The market condition is changing dynamically every month, week and day. iPad 3 must be doing not as good as before in terms of sale due to the N7, and Kindle HD7, soon Nook HD7 which will be out with even higher resolution. However, that doesn't mean Apple cannot sell lower resolution iPad mini.

    iPad mini still has its market space as long as it is priced correctly. $299 probably is the good price point. It's mainly to replace iPad 2, which I believe its sales dropped significantly recently.

    Considering many people will be OK to pay extra $50-$100 for an Apple tablet. So, if its $299 price should be OK as long as its resolution or PPI is similar to N7 and HD7.

    The rumor says that iPad mini will has 1024x768. If this is the case, Apple has to lower the price to $249 or $199 level. Yes, that will affect $499 iPad 3 sales. However, it doesn't do this. It also will affect iPad 3 sales too.

  • Report this Comment On October 13, 2012, at 10:38 PM, VelcroHalo wrote:

    BradApple's comment inspired me to create an account, so kudos. I feel you are a bit bias on the matter although I disagree with the post as well. I think people wont really be lining up outside of Apple stores for these, the bigger market would be stores like Best Buy. Unless this has something new forget big lines at Apple stores because the general Apple buyer wont be interested in getting something less powerful. Where it would really shine is side by side the other tablets like in a Best Buy. To be fair I am an Android fan. I work in the tech field and it's known you can do more with Android. If you know what you're doing. I tell all my clients when asked which operating system "If you are good with technology Android, because it is a bit of a steeper learning curve but you can do more and have less restrictions. If you are not very good with technology or learning it quickly you want Apple. They are beautiful products and easy to learn and I started into smartphones with the original iPhone." And really that's why I think these will not fail. I am an Android person who has the phone and large tablet to prove it. But a cheaper Apple product that is larger than the iTouch is great for me because I care about iOS and the apps it brings. I don't need a full iPad, I have my Asus Transformer. But a cheaper smaller iPad would be great for me and my needs. It can fill that smaller tablet role and expand what I can do since it is a new operating system and new content opens up to me. Apple will take a hit on the front end sales of larger iPads, but also grow on the back end from new revenue streams from their digital store fronts. And sadly just having an Apple branded product will drive sales...

  • Report this Comment On October 13, 2012, at 10:42 PM, Microwave52 wrote:

    This analysis sucks. It doesn't take into account the huge demand expected from developing markets such as China. I often travel to China and can't help but notice all of the smaller Samsung tablets. I'm sure that if Apple were to introduce a smaller iPad at a price point lower than the current iPad, the people in China will love it. China could easily become the iPad mini's largest market, and a huge market at that!

    There's much more to the world than just the USA. Stop viewing the world through red, white, and blue glasses and start viewing the world from a global perspective. Apple has done so with the iPad mini.

  • Report this Comment On October 13, 2012, at 11:11 PM, haysdb wrote:

    "It's only 25% not 40%."

    The 7" Kindle Fire and Google Nexus 7 have screens that are 21.4 and 22 sq inches respectively. A 7.85" 4:3 screen, as is rumored for the iPad mini, would have an area of 30 sq inches. 30 is 40.6% greater than 22.

    "And how do you know it will be "super thin and super light" compared to kindle and nexus, it is not out yet."

    I don't "know" but given how thin and light the new iPhone and iPod Touch are, I think it's a given that the smaller iPad will likewise be extremely thin and light.

    "And you know that almost nobody can tell the difference if something is 2mm thinner than something else especially the size of a phone or pad."

    The iPhone 5 is only 1.4mm thinner than the 4 and 4S, and yet the thinness and lightness are the first things you notice when you pick one up for the first time.

  • Report this Comment On October 13, 2012, at 11:25 PM, LighteningLad wrote:

    Apple does best when it makes it's own market rather than responding to existing markets. I strongly disagree with the authors need to make the camera feature a big deal on a tablet. I did a little poll among friends who like myself are married to an iPad. Of 23 responses only 2 used the iPad 2/3 camera feature often, 0 bought the iPad because it had a camera feature, 5 were happy it was there, 18 indifferent. If the iPad were iPhone sized, Yes a camera is nice, but who carries around a dedicated camera that size. iPad mini will sell the initial 10 million units and be a big deal this Christmas, then die a slow death. Overall the iPad will take the hit, rather than other small tablets. Apple will price it at $349 and $399, they can't price it lower because they have to support the OS and the premium Apple name, any higher and people will go iPad for the small difference which is what will happen after the newness period. I am an early adopter of anything Apple, you can't go 5 ft in this house without seeing something wearing the brand, but I won't be buying a mini, maybe a replacement for my current and highly used iPad with another iPad and I am in the market for the soon to be released updated iMac, but what can't my iPhone and iPad not do that a mini can? My cheap skate friends who go generic on anything electronic aren't going to spend $349 when they can buy Google or Amazon $200 tablets. WHAT WERE YOU THINKING, APPLE?

  • Report this Comment On October 13, 2012, at 11:48 PM, haysdb wrote:

    "The rumor says that iPad mini will has 1024x768. If this is the case, Apple has to lower the price to $249 or $199 level."

    You're saying consumers won't pay more than $249 for a tablet with a screen resolution of 1024x768? Um, the iPad 2 costs $399.

    The resolution is the same as the iPad 2 but the screen is 1/3 smaller so the pixel density will be higher. But it may also be true that because it's a smaller device, people will tend to hold it closer, so maybe the two offset.

    The question most consumers will ask won't be "what's the screen resolution" but rather how does it look? Color, contrast, brightness - there is more to it than just how many pixels it has. We don't have that answer yet since no one outside of Apple has seen it yet.

  • Report this Comment On October 14, 2012, at 2:48 AM, GLOWKERVER wrote:

    Ok fellow fools,

    This analysis is not too far fetched. I really like Peter Lynch and he might begin to refer to this as diworsification. I am an owner of Apple stock and recently initiated long call positions at 650 for January. The latest price move put me in the hurt locker and is testing my confidence in upping my leverage in Apple.

    Consider this simple business concept. Engaging in costly price wars is never good policy. My thought is why try to place a product in an environment that is already cut throat on pricing. What makes Apple so great is that they make 40%+ margins!! I also question the strength of a smaller iPad and agree they are late to market it, when Apple is used to leading the charge. For me the iPad size is the perfect go between with my laptop. I could even stand another inch or two on the screen. I almost never travel with my laptop any more and feel that a smaller ipad is just a iPod touch.

    With that said I do agree that the Apple ecosystem is very strong and I can say that it would take quite a product to separate me from the app store and iTunes. Lets face it though, there are somethings that that me concerned, why separate from Google Maps and the Youtube app. I miss the heck out of both of those. While butt heads with a company like Google that has the cash to butt back. I would have prefered to see collaboration with Google. I do think that world wide demand will satisfy the analyst reccommendations this year.

    Fools so I ask your inputs on the nuts and bolts, was I wrong to leverage up in Apple for Janurary. Should I sell now and get out of the way or do I have it right. Definitely got the timing of that option purchase dead wrong. Will Apple keep growing its margins or will we see the first sign of reduced margins this quarter? I think that it won't be the earnings that first cause Apple stock to turn downward it will be the margins showing weakness.

  • Report this Comment On October 14, 2012, at 4:28 AM, Nuren2007Thapa wrote:

    If Apple sells the iPad Mini for 2000 yuan, or $300, just in China it won't need to sell it anywhere else in the world. People would love its price and size (transportability), and just the fact that it's Apple. Believe me most Chinese would rather buy an Apple tablet for $300 rather than buying a cheap Chinese knockoff or Nexus, Kindle, Nook for half the price. The myriad of Android iPad tablet copies are not selling well here at all, although prices are very low compared to the iPad. Apple could easily sell 50 million iPad Minis here within a few months if it really tried. Just imagine, people right now are forced to pay up to $1500 for iPhone 5s in the gray market, and do. The Chinese just don't buy Nooks and Kindles, not to mention Toys R Us tablets (they are mostly for the US market), and, in the last few years, Apple has become a household name, a premium, trusted brand that everyone desires. It's strange that the Chinese have to wait six months for Apple products to be released in China and, in the meantime, are forced to pay high gray market prices. I would urge Apple to release their products here in China at the same that they are released in the US, and at around the same price, and see what happens. With it's booming economy and culture of saving, hundreds of millions of Chinese have lots of disposable cash, which they would be willing to spend on quality Apple products at the right price, but not on Kindles, Nooks, and Nexuses. And it's really not fair that these products are manufactured right here in China for Apple and then shipped to the rest of the world while China has to wait six months for them to be released here and pay double or more the US price. The Samsung Galaxy Note 2 has been available here for around $550 right after it's release, but no one is rushing out to buy it. I live in China and currently own an iPhone and iPad 2, but would buy not one but two iPad Mini's right away if it was available here for around $300. If Apple just gave priority to selling it's products in China, like Nokia did with the Pureview 808 in India, for around the price they sell for in the US, Apple would just need to worry about meeting the incredible demand. Apple is held in the highest respect in China although Apple has not given the Chinese market the priority it justly deserves. Americans especially should be proud of Apple and support it, not denigrate it like many do.

  • Report this Comment On October 14, 2012, at 8:14 AM, Rickinva54 wrote:

    The iPad mini will do very well. The biggest fallacy in this analysis and almost all press analysis is comparing hardware and calling it the same. The mini will not only be better hardware the most important attribute is entry into the Apple iOS ecosystem. The Apps, the OS, SIRI, possible Apple TV remote. This is riding first class on the tablet airlines, as opposed to riding in baggage with Kindle and Nexus. And just one more thing that I NEVER hear mentioned in these articles, Where exactly do you go for questions and troubleshooting if you own one of these other tablets? With an iPad, I go to one of 200 Apple stores where the customer service is incredible. If you don't think that makes a difference in buying these tablets, you have a lot to learn about what makes Apple so successful.

  • Report this Comment On October 14, 2012, at 8:14 AM, Arkbro wrote:

    I am super excited for the surface!!!!!!

  • Report this Comment On October 15, 2012, at 1:19 PM, jordanwi wrote:

    As a Canadian, I wonder if anybody outside of the U.S has ever seen or even heard of the kindle _____ (?). iPad mini It will be a giant hit. The naysayers are always wrong, and it's getting to be a tired old story.

  • Report this Comment On October 15, 2012, at 1:50 PM, Mega wrote:

    Bookmark this article to look back and laugh at it in a couple of months.

  • Report this Comment On October 15, 2012, at 3:22 PM, chilero wrote:

    Doesn't the iPod Touch start at $299? They can't price it less than that so it has to come in at $399. To come in any cheaper they have to also drop the price of the iPod Touch. Too expensive and people will ignore the minipad and stick with their maxiPad.

  • Report this Comment On October 15, 2012, at 3:40 PM, Zendwell wrote:

    Haven't you learned to trust Apple yet?

  • Report this Comment On October 15, 2012, at 4:29 PM, Darwood11 wrote:

    "The Only Reason Why the iPad Mini Won't Matter."

    As someone who doesn't own an iPad, but does own a Kindle, the bottom line is "I don't care."

    For the APPL centric crowd, I realize that i am considered to be a Neanderthal and a Troglydite.

    No matter. I may be extinct in a few million years, but oh, within 100 years I'll be dead! So should I care? Not one bit! And, by the way, within a few years, an "apple" will be a low hanging fruit. So deal with it!

  • Report this Comment On October 16, 2012, at 12:33 AM, powerlift wrote:

    this analysis is right on, Apple has had a great ride, buts it's about over. Too much competition and the death of Steve Jobs will catch up to the company in the next year. It has happened to every other "top dog" and it will happen to Apple as well.

  • Report this Comment On October 16, 2012, at 6:11 PM, Melci wrote:

    @Chilero, the 3.5" iPod touch starts at $199, it is the 4" version that starts at $299.

  • Report this Comment On October 19, 2012, at 11:00 AM, rampagehall wrote:

    The one reason I will buy it is because I have Apple one on one and someone will show me how to use it. That doesn't happen with any other product. My extended family has Nooks on the shelf, kindles gathering dust, tablets standing idle and playbooks in boxes in the basement.

    The iPad mini will get used because Apple will show us how.

  • Report this Comment On October 19, 2012, at 11:41 AM, Garyestein wrote:

    The drivel that this website produces under the guise of being analysis for the little guy is appalling in it's lack of research, market knowledge, and the financial status of the stock in question. It truly has become a Fools advice column and anyone who follows the advice given risks becoming a fool in the process.

    You have completely avoided discussing the Education market for the new smaller iPad and the mention of Books being a big part of the announcement on the day that the Mini is presented to the public, Apple iPads all ready dominate the education tablet market ant the mini will make them affordable for an entirely new market segment of schools from rural areas with smaller technology budgets and the developing worlds education systems.

    My recommendation is be a contrarian when it comes to any advice you get from The Motley Fool newsletters.

  • Report this Comment On October 19, 2012, at 11:51 AM, AdamCatalyst wrote:

    Anyone who has used all the devices mentioned in this article knows that they are all different devices, with different qualities and attributes. To virtually reduce consumers purchasing to price alone is useless. The small iPad will almost certainly be a both a premium priced, and premium designed and built option in the sub 10" tablet market. The pricing and quality proposition should situate it relatively uniquely in that market space. If consumers want that value proposition, Amazon knocking $50 off will not matter to them.

  • Report this Comment On October 19, 2012, at 12:10 PM, adjaq wrote:

    You analysis is sound and logical. But the one thing you miss is the large group of Apple fanboys which will buy anything coming from Cupertino. I bet many will buy one or two even though they have the full sized version. Good for me as the stock keeps climbing up.

  • Report this Comment On October 19, 2012, at 3:41 PM, Slinger812 wrote:

    The IPad mini, or whatever they will call it, will be a raging success, in a short time outselling the IPad, even though the IPad sales will continue to climb.

    Why, because the IPad mini will be a universal remote! It will control all of your entertainment devices and eventually, as appliance markets come on board, control heating, lighting, air conditioning and even your alarm clock and stove. You might have one in every room if you can afford it! Apple doesn't COPY other devices it is COPIED, and eventually the unimaginative writers that work for Motley Fool will see the light.

  • Report this Comment On October 19, 2012, at 5:53 PM, 48ozhalfgallons wrote:

    "....... and just the fact that it's Apple"

    "Haven't you learned to trust Apple yet?"

    "..... among friends who like myself are married to an iPad."

    Sounds like a cult to me.

  • Report this Comment On October 20, 2012, at 7:57 PM, lowmaple wrote:

    48oz A cult of a couple 100 millon? Some hge number anyway.

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