I am big fan of iPad mainly because of it's form factor, display, graphics rendering and excellent user interface. This smaller iPad, may be needed to compete with Google Nexus 7 and Aamzon Fire tablets.. As per this article it is similar to iPod and iPod mini concept. To be honest, I never liked iPod mini as well. May be it is my own form factor which makes me like only bigger form factors ;-) I do love my iPhone and have never able to use my 7 inch tablet over it..
I hope that this new iPad mini turns out to be better experience than other minis out there. I would have preferred that Apple continue with their older versions at cheaper prices to cater for lower end market. That would give them broader spectrum in terms of price range but won't give them form factor spread. This form factor IS unique differentiation for iPad any how.. I don't know, why they want to loose it.. May be, I should do MBA so I can understand their strategy..
However, I very strongly feel that it won't have good impact on Apple in long term. It may in turn start eating their own market instead of growing it overall. Moreover, impact of content on smaller screen size will further diminish their iTunes/Cloud eco-system value. In short term it will definitely help them and I do expect some share boost if analysts haven't already factored iPad mini in..
What I remember from older days that Jobs was totally against smaller form factors.. I am still supportive of his idea of iPad's form factor. I still believe that new management is focused on Stock price and that is the reason for all the new product line introductions instead of focusing on details and quality of the products. It is too early to see the direct impact of shift in change.. I hope that this doesn't happen as I really love Apple for the value they create out of their products is amazing and quality is usually much better than similarly configured devices.
Brian White, an analyst with Topeka Capital Markets, said there are a number of reasons why Apple would add a smaller iPad to its product offerings, including increasing its ability to tap deeper into developing markets such as China and taking a step to realizing Jobs’ vision of transforming the multibillion-dollar textbook industry by providing cheaper devices for K-12 students.
“As you drop the price point and size, you are opening up consumers you weren’t addressing before,” he said. His firm’s research indicates a market exists for smaller iPads that sell for $250 to $300.
White also believes a number of current iPad owners would be willing to buy the smaller model. Women, for instance, would like to be able to slip a slimmer iPad into purses while men could carry a smaller model inside sport coats, he said.
“There will be some who want both” iPad models, White said. Although Jobs once inveighed against a smaller iPad, the Apple co-founder was known for changing his opinions, White said. And, he added, Jobs instructed CEO Tim Cook to run the company as he sees fit. And that could be shifting Apple’s iPad strategy. An iPad mini could cannibalize 10 to 20 percent of sales of the more expensive model, White said. But a cheaper iPad would also bring new customers to the Apple ecosystem, which frequently results in future sales of its other devices, observed Sterne Agee analyst Shaw Wu. “This would be a competitor’s worst nightmare,” he said. “They already are having a hard time competing with the current iPad.” Apple’s latest model starts at $499; its older version is offered at $399. A less expensive iPad would take away the price advantage of competitors, Wu said. Last year, Apple had 62 percent of the tablet market, according to IHS iSuppli. Overall, the tablet market is expected to soar this year to 124 million units, up 90 percent from 65 million in 2011, the market research company projects.
Apple’s ability to stay ahead of competitors allows the company to sell high volumes of new products. This enables the company to aggressively price its products while maintaining large profit margins, Wu said. He estimates the company’s profit margin on the new Retina display iPad is a bit under 40 percent, whereas the profit margin on the older model is about 40 percent. Competitors, on the other hand, have profit margins that range from 20 to 25 percent on their tablets, Wu said.
Apple plows its large profits back into research and innovation in a way other consumer electronics companies can’t, he said. “That’s what makes Apple so dangerous,” Wu said.
Bajarin said Apple learned the importance of creating a dominant computing platform — from Macintosh computers to iPhones — after Microsoft’s Windows franchise took over the global PC market decades ago.
“They are dedicated to doing that, and this is part of that strategy,” he said of a smaller iPad.
Contact John Boudreau at 408-278-3496.
I hope that this new iPad mini turns out to be better experience than other minis out there. I would have preferred that Apple continue with their older versions at cheaper prices to cater for lower end market. That would give them broader spectrum in terms of price range but won't give them form factor spread. This form factor IS unique differentiation for iPad any how.. I don't know, why they want to loose it.. May be, I should do MBA so I can understand their strategy..
However, I very strongly feel that it won't have good impact on Apple in long term. It may in turn start eating their own market instead of growing it overall. Moreover, impact of content on smaller screen size will further diminish their iTunes/Cloud eco-system value. In short term it will definitely help them and I do expect some share boost if analysts haven't already factored iPad mini in..
What I remember from older days that Jobs was totally against smaller form factors.. I am still supportive of his idea of iPad's form factor. I still believe that new management is focused on Stock price and that is the reason for all the new product line introductions instead of focusing on details and quality of the products. It is too early to see the direct impact of shift in change.. I hope that this doesn't happen as I really love Apple for the value they create out of their products is amazing and quality is usually much better than similarly configured devices.
SHIFT IN STRATEGY
Apple eyes smaller, lower-price iPad
With 7.85-inch screen, mini device would be designed to block competitors
By John Boudreau
jboudreau@mercurynews.com
Apple may be on the verge of rewriting its iPad strategy by rolling out a smaller and less expensive model this fall, a move analysts say could further distance it from competitors already struggling to play catch-up.
A chorus of news organizations and analysts believe Apple is building an iPad mini — its display screen could be 7.85 inches instead of the current 9.7 inches — resembling the strategy it deployed for the iPod, in which the company offered digital media players with varying features and prices, including the low-end $49 iPod shuffle.
That move blocked lower-end competitors from grabbing market share from Apple, said Creative Strategies analyst Ben Bajarin. “It shows Apple is not afraid to segment its products,” he said.
While no one knows for sure what Apple’s next moves are until they announce them, industry experts increasingly believe a smaller iPad is in the offing.
Investors on Thursday appeared happy with increasing speculation that Apple is preparing to sell a smaller iPad. Shares of Apple closed up nearly 2 percent to $609.94.
Apple is not going to stand still as more tablet competitors try to encircle it, said Bajarin, noting Google’s new move into the market with its Nexus 7, a 7-inch device that starts at $200. Microsoft is planning to roll out a series of tablets called Surface.
Rumors about the development of a 7-inch iPad have been around for years. The market, though, may be right for one now, experts say. The late Steve Jobs disparaged a smaller-screen tablet in a 2010 conference call with analysts, saying it is too big to compete with an iPhone but too small to provide a good user experience. But technology and markets change, analysts say.
Apple eyes smaller, lower-price iPad
With 7.85-inch screen, mini device would be designed to block competitors
By John Boudreau
jboudreau@mercurynews.com
Apple may be on the verge of rewriting its iPad strategy by rolling out a smaller and less expensive model this fall, a move analysts say could further distance it from competitors already struggling to play catch-up.
A chorus of news organizations and analysts believe Apple is building an iPad mini — its display screen could be 7.85 inches instead of the current 9.7 inches — resembling the strategy it deployed for the iPod, in which the company offered digital media players with varying features and prices, including the low-end $49 iPod shuffle.
That move blocked lower-end competitors from grabbing market share from Apple, said Creative Strategies analyst Ben Bajarin. “It shows Apple is not afraid to segment its products,” he said.
While no one knows for sure what Apple’s next moves are until they announce them, industry experts increasingly believe a smaller iPad is in the offing.
Investors on Thursday appeared happy with increasing speculation that Apple is preparing to sell a smaller iPad. Shares of Apple closed up nearly 2 percent to $609.94.
Apple is not going to stand still as more tablet competitors try to encircle it, said Bajarin, noting Google’s new move into the market with its Nexus 7, a 7-inch device that starts at $200. Microsoft is planning to roll out a series of tablets called Surface.
Rumors about the development of a 7-inch iPad have been around for years. The market, though, may be right for one now, experts say. The late Steve Jobs disparaged a smaller-screen tablet in a 2010 conference call with analysts, saying it is too big to compete with an iPhone but too small to provide a good user experience. But technology and markets change, analysts say.
Brian White, an analyst with Topeka Capital Markets, said there are a number of reasons why Apple would add a smaller iPad to its product offerings, including increasing its ability to tap deeper into developing markets such as China and taking a step to realizing Jobs’ vision of transforming the multibillion-dollar textbook industry by providing cheaper devices for K-12 students.
“As you drop the price point and size, you are opening up consumers you weren’t addressing before,” he said. His firm’s research indicates a market exists for smaller iPads that sell for $250 to $300.
White also believes a number of current iPad owners would be willing to buy the smaller model. Women, for instance, would like to be able to slip a slimmer iPad into purses while men could carry a smaller model inside sport coats, he said.
“There will be some who want both” iPad models, White said. Although Jobs once inveighed against a smaller iPad, the Apple co-founder was known for changing his opinions, White said. And, he added, Jobs instructed CEO Tim Cook to run the company as he sees fit. And that could be shifting Apple’s iPad strategy. An iPad mini could cannibalize 10 to 20 percent of sales of the more expensive model, White said. But a cheaper iPad would also bring new customers to the Apple ecosystem, which frequently results in future sales of its other devices, observed Sterne Agee analyst Shaw Wu. “This would be a competitor’s worst nightmare,” he said. “They already are having a hard time competing with the current iPad.” Apple’s latest model starts at $499; its older version is offered at $399. A less expensive iPad would take away the price advantage of competitors, Wu said. Last year, Apple had 62 percent of the tablet market, according to IHS iSuppli. Overall, the tablet market is expected to soar this year to 124 million units, up 90 percent from 65 million in 2011, the market research company projects.
Apple’s ability to stay ahead of competitors allows the company to sell high volumes of new products. This enables the company to aggressively price its products while maintaining large profit margins, Wu said. He estimates the company’s profit margin on the new Retina display iPad is a bit under 40 percent, whereas the profit margin on the older model is about 40 percent. Competitors, on the other hand, have profit margins that range from 20 to 25 percent on their tablets, Wu said.
Apple plows its large profits back into research and innovation in a way other consumer electronics companies can’t, he said. “That’s what makes Apple so dangerous,” Wu said.
Bajarin said Apple learned the importance of creating a dominant computing platform — from Macintosh computers to iPhones — after Microsoft’s Windows franchise took over the global PC market decades ago.
“They are dedicated to doing that, and this is part of that strategy,” he said of a smaller iPad.
Contact John Boudreau at 408-278-3496.
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