The Silly Exercise of Predicting iPad mini Sales

October 19th, 2012

With Apple confirming a media event for October 23, it is a given that there will be a smaller iPad, and possibly a few other products, such as the long-delayed iMac refresh. In the tradition of the iPhone 5, many of the details of the iPad’s tinier sibling have already leaked, and they mostly point to a 7.85-inch display, with the same 4:3 aspect ratio of the regular iPad. This means that apps won’t have to be altered to fit the new form factor.

The rest of the specs probably won’t be significant in the scheme of things. Apple might, however, present design changes that would later be reflected in the fourth generation iPad. There’s even a slight possibility, I suppose, for a minor refresh to the new iPad, a tad slimmer and lighter, with the A6 chip for better performance. But the rumor mills that have lately been mostly on the ball about new Apple gear haven’t presented much in the way of useful information about such an animal, and it’s not as if the iPad requires an update now.

Once the smaller iPad (call it “mini,” “nano” or whatever) appears, will it just expand the market, or somewhat cannibalize sales from the iPad 2 and new iPad? I suppose people who buy on price, or just need something smaller for easier transport and book reading, would want to consider an iPad mini. One estimate had it that every five iPad mini sales would cannibalize one sale of the full-sized model, but that assumption, while logical, is just guesswork.

But there’s also a published report that the iPad 2 will disappear when the mini shows up.

The real issue, I suppose, is just how much demand exists for a smaller tablet. While the Amazon Kindle Fire has apparently done pretty well, or at least Amazon claims it has without releasing actual numbers, it doesn’t seem as if other 7-inch tablets have caught on. Google’s revenue for the last quarter missed estimates, and it doesn’t seem they are making a whole lot of money from their mobile platform. So where’s the market?

Obviously, and we assume there will be a smaller iPad, Apple expects to sell a bunch of them, particularly during the holiday season. They would also hope to grow tablet market share from 60% or so to 70% or higher, putting the iPad in the same ballpark as the iPod. Then again, Apple was only too happy to release iPods in different sizes, at different price points, to cover a host of different potential buyers. The casual shopper, for example, may choose a $49 iPod shuffle for a gift, or perhaps as a second gadget to take to the gym.

When you forget those outrageous comments from Steve Jobs about the need to sandpaper your fingers to use a smaller tablet, you can see where Apple will get around that objection by pointing to the larger amount of screen real estate with a 7.85-inch tablet and the 4:3 aspect ratio. Remember that those 7-inch tablets are generally 16:9, good for watching widescreen movies, but less useful for book reading. It’s all about the square inches, really.

As to sales, some suggest 10 million for the current quarter, assuming the announcement on October 23, and actual availability before the end of the month. Forgetting the cannibalization possibility, if the iPad mini comes in for a starting price of $249, the bottom will fall out of those $200 devices. For $49 extra you get a genuine iPad, complete with Apple’s fabulous app ecosystem — and the ability to use a Kindle app for reading titles from Amazon. That’s not the sort of premium that would be easy to overcome. I suppose Amazon could reprice the smaller Kindle HD at $149 to compete, and that Google could do the same with the Nexus 7. But that would only hurt their bottom lines. Not so much with Amazon, but Google’s less-than-stellar financials may require a serious rethinking of mobile platform strategy.

Indeed, I have to wonder whether Android even makes sense if it’s not delivering big revenue. Sure, hundreds of millions of mobile devices are using the platform, but if development stopped tomorrow, no existing product would be severely impacted. It’s not as if most of them are upgradeable to a newer OS anyway.

It’s a sure thing though that Apple isn’t going too flesh out the iPad lineup with even more screen sizes. That will only add to customer confusion, and create the same sort of annoying environment in which other tech companies operate. There are enough tablet sizes now to confuse anybody who wants to make a decision if it’s not going to be an iPad. I would not expect Apple to suddenly consider an 11-inch iPad maxi to expand the line. At that size, anyway, a regular note-book may be more suitable anyway. Besides, Apple still has a flair for understanding usability and making your purchase decisions reasonably simple. If the posted parts numbers are correct, the iPad mini will follow the standard iPad playback. It’ll be available in white or black, with various storage sizes, and a cellular networking option. That should be good enough.

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