According to DigiTimes, "Taiwan based supply chain makers have not received orders for new versions of the iPad mini." This, DigiTimes claims, has led its sources in the supply chain to believe that Apple (NASDAQ:AAPL) will not launch an update to its iPad mini lineup in 2015, ending the lineup.
While such rumors are hardly new, the issue is worth reexamining.
Apple sure didn't show the iPad mini much love in 2014
When Apple refreshed its iPad lineup last year, it made a number of unusual moves. Firstly, while the iPad Air 2 was made thinner, faster, and just all-around better, the iPad mini 3 was essentially just an iPad mini 2 featuring Touch ID.
Now, do keep in mind that it is well-known that the iPad mini lineup generally carries lower selling prices and gross profit margin than the flagship iPad Air lineup. Given that even Apple's research and development spending isn't unlimited, it's no surprise that the company is going to put more effort behind its higher-margin, higher average selling price products.
That being said, for Apple to not provide a meaningful update to the iPad mini lineup signals that iPad mini 2 sales were probably terrible during its run as flagship. The reasoning here on Apple's part may have simply been: "Well, if customers didn't really respond well to the iPad mini 2, which was a great product at its launch, then what good would it do to put a lot of effort into the iPad mini 3, which won't sell well regardless of product quality?"
Is Apple likely to kill the iPad mini, though?
While I'm convinced that the iPad mini lineup as a whole isn't selling well (and I'd wager the iPhone 6 Plus isn't helping iPad mini's case at all), I still believe there are a number of Apple customers who still appreciate the option to buy smaller iPads.
My guess, then, is that Apple won't kill the line (that is, unless sales truly become de minimis), but I think the pattern of relatively meagre and/or infrequent upgrades is going to continue. After all, if the demand for the product category just isn't all that robust, then it might make sense to just milk current products for as long as possible.
Further, by continuing to pour most of its energy and resources into the iPad Air and, potentially, the widely rumored larger iPad, Apple can continually tempt iPad mini users to buy up the stack. In fact, while a relatively stale iPad mini model will be available to those who really must have an iPad mini, customers may be tempted to try out a larger iPhone and/or a larger iPad in lieu of truly great iPad mini offerings.
In that case, given the higher margins of the larger iPads (and the even higher margins of the large iPhone), this would be a net win for Apple. The only risk is if customers must have a smaller tablet, don't like Apple's offerings, and instead opt to buy small tablets from competitors. However, Apple still has the advantage that iPads are the only tablets that run iOS, so if a customer prefers iOS, then switching to Android/Windows might simply be out of the question.
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Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. 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.