Is This iPad Dead?

Next Tuesday is Apple's (Nasdaq: AAPL  ) iPad Mini day. This we know. According to a recent research note, Apple may even take the opportunity to kill an iPad at a time when Apple bulls will likely be cheering, "Long live the iPad!" Huh?

The iPad with a target on its back is likely the iPad 2. At least that's what Evercore Partners analyst Rob Cihra thinks. The iPad 2 was launched early last year, but remained in production this year. In fact, Apple even used the device as a low-volume and therefore low-risk testing ground for Samsung's 32-nanometer chip manufacturing process, quietly switching from the 45-nanometer chip behind the scenes this year.

That brought improved battery life with it, but more importantly allowed Apple to test drive Sammy's 32-nanometer node before subsequently migrating the all-important iPhone 5's A6 chip to the same manufacturing process.

The iPad 2 has played an important role in pricing strategy also, occupying a lower $399 entry-level price point while the third-generation model starts at $499. That puts a little bit of heat on Amazon.com's (Nasdaq: AMZN  ) Kindle Fire and Google's (Nasdaq: GOOG  ) Nexus 7, but at twice the cost of those devices, the heat may be more of a gentle warmth. Then again, that's where the iPad Mini comes in to crank up the temperature.

The $399 price point has been attributed to the tablet's increased uptake in the education market, but it also presents some strategic dilemmas, particularly with the introduction of the new iPod touch models.

Cihra believes Apple's grand scheme requires "clearer product tiers," in which case various iPad Mini models can occupy the lower end of the pricing spectrum. Pricing remains the biggest unknown, but could start as low as $249 for an 8 GB model, adding $100 for additional storage capacities. That could potentially put a 16 GB iPad Mini in close competition with the iPad 2.

Product

Display

Storage

Price

iPad Mini*

7.85-inch*

16 GB*

$349*

iPod Touch

4-inch

64 GB

$399

iPad 2

9.7-inch

16 GB

$399

iPad Mini*

7.85-inch*

32 GB*

$449*

iPad 3

9.7-inch

16 GB

$499

Source: Apple. *Estimated.

That hypothetical lineup around the $399 vicinity is anything but clear. The iPad 2 has served its purpose well, but now it's gotta go.

The introduction of the iPad Mini is an event Apple investors have been looking forward to for months. The stakes are high and the opportunity is huge, so to help investors understand this epic Apple event, we've just released an exclusive update dedicated to the iPad opportunity. By picking up a copy of our premium research report on Apple, you'll learn everything you need to know about the iPad, and receive ongoing guidance as key news hits. Claim your copy today by clicking here now.

Evan Niu, CFA, owns shares of Apple. The Motley Fool owns shares of Apple, Amazon.com, and Google. Motley Fool newsletter services recommend Apple, Amazon.com, 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.


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  • Report this Comment On October 19, 2012, at 9:13 PM, NickD wrote:

    Wasn't Apples market cap over 600 billion its 571 billion today how is that safe?

  • Report this Comment On October 20, 2012, at 6:10 AM, Microwave52 wrote:

    Thi iPad mini may be Apple' first product aimed primarily at China. The largest Apple store in Asia just opened in Beijing while Apple opened a second Hong Kong store last month. Could these new store openings be tied to Apple's expectations for extremely high sales of the iPad Mini in China?

    I spend a lot of time in China/Hong Kong and can't help but notice all of the smaller sized Samsung tablets in use. Given the prestige that Apple enjoys in greater China, Chinese consumers could easily choose an iPad Mini instead. Cannabilization of existing iPads would be minimal as Chinese consumers prefer smaller sized tablets already.

    Does make me curious...

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