On October 23, Apple launched its much rumored iPad Mini along with a group of other updated products. The 8-inch tablet was the biggest announcements the California based device maker made following the release of the iPhone 5. The latest tablet from Apple now puts itself squarely in the middle of the small tablet battle between rivals Amazon and Google.
Canadian buyers can purchase the 16GB wi-fi model iPad mini for $329. The 16GB and 32GB models will ship on November 2 to Canada. The price point is a lot higher that many had expected and hoped the company would choose because competitors sell similar sized tablets for $200 dollars.
The 7.9 inch “iPad mini” is a move by Apple to stem the gains Amazon and Google have made in the growing smaller tablet market. Apple only has a larger 10 inch product in the sector and has dominated the space but smaller devices have been gaining customers fast.
However after the release of the new device some concerns have arisen. The hefty price tag seems to be one problem. While some Wall Street analysts think that the new tablet could also cannibalise sales and customers of the larger $499 iPad. JMP Securities analyst Alex Gauna thinks the price is too high, stating that “It’s coming in the range that most were grumbling about and that, quite frankly, we’re a little bit concerned about.”He goes on to say that, “It’s a little confusing at this juncture to try and figure out how it fits into the line-up. Is it going to cannibalize the more expensive iPad?”
Analysts believe that Apple was forced into the smaller tablet segment even though it had been public about the fact that it did not believe that the smaller tablet was a good idea. The new iPad mini is also the first new product to be added to Apple’s line since Chief Executive Tim Cook took over. The defensive move from the new CEO seems to be a reaction to Amazon’s Kindle and Google’s Nexus 7 taking over the pocket size tablet market.
Some analysts believe that the new tablet may be a miss for Apple because they have missed the “starting sweet spot” for the smaller tablet. A recent Baird Equity Research survey shows the range to be from $249 to $299. Baird Equity Research analyst, William Power, states that, “When asked what the most they would pay for a smaller iPad was, our respondents on average said that they would pay $242 for a 7-inch iPad and $268 for an 8-inch iPad.”
Apple’s iPad has been a profit powerhouse so far for the company, as they have sold 100 million tablets thus far with the sales accounting for 26% of Apple’s third-quarter revenue. Some observers believe that these stellar numbers are now at risk because other rivals in the segment take almost no profit from their devices. Amazon breaks even with its Kindle Fire while the Nexus 7 is sold at cost. Furthermore, some analysts see the smaller device out selling the larger tablet in a few years.
Source: Financial Post
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