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A Swing and a Miss With the iPad Mini Retina

http://www.fool.com/investing/general/2013/11/18/a-swing-and-a-miss-with-the-ipad-mini.aspx

Chad Henage
November 18, 2013

With Apple's (NASDAQ: AAPL) iPad mini with Retina display reported hitting physical and virtual store shelves, it makes sense to look at what this product could mean for the company. When the first iPad mini was introduced at a price of $329, many believed this was Apple beginning to realize that it had to lower prices to keep its tablet market share. However, with the latest mini priced at $399, the company seems to have reversed course and that may spell trouble for the iPad division.

Why small tablets?
It's well known that tablets are cannibalizing PC sales and that consumers are finding more and more reasons to own this type of device. Whether it's Apple showing a customer using FaceTime or Google (NASDAQ: GOOG) featuring its Google Now service on an Android device, there are many reasons a tablet may be better than a traditional PC.

If you like reading, Amazon.com (NASDAQ: AMZN) hopes that you'll consider its Kindle Fire lineup to get your digital page turning fix. Of course, Samsung isn't going to cede market share to anyone, and the company is pushing the smartphone and tablet combination with the Galaxy Note III and also offers the Galaxy Note 8 if you want a true tablet experience.

According to IDC research, in the first quarter of this year one in every two tablets shipped was below eight inches in screen size. In addition, IDC expects smaller tablets to continue to grow in 2013 and beyond.

What customers wanted, and what they got
Going into the iPad lineup refresh, most expected a thinner, lighter, and better full-sized iPad, and that's pretty much what they got with the iPad Air. Apple kept to its practice of staying at the same price point and at $499 the iPad Air is without question the best full-sized iPad.

However, when it comes to the mini, Apple's magic of delivering the same price with better specs got left by the wayside. While the mini does sport the Retina display, a better processor, and other improvements, the price jumped from $329 to $399. While it's true the first generation mini dropped to $299, this hardly makes the first generation device a bargain.

In fact, you could make the argument that the first generation mini is one of the worst combinations of price and display quality.

Device

Price

PPI

PPI per $1 of cost

iPad mini Retina

$399

326  

$1.22

iPad mini first gen.

$299

163  

$1.83

Google Nexus 7"

$229

323  

$0.71

Kindle Fire HDX 7"

$229

323  

$0.71

Galaxy Note 8"

$379

189  

$2.02

Given that display quality is a key factor in selecting a tablet, the iPad mini first generation seems to lag most of its peers. Given that this device also uses a dual-core processor whereas most of its competition uses quad-core processors or better, the difference is even starker.

The data above suggests that consumers shouldn't choose the iPad mini first generation, but what about the iPad mini with Retina display? The truth is, Apple is almost begging customers to just spend the extra $100 and get the iPad Air. The iPad mini with Retina display is priced higher than any of the devices