iPad Mini Could Reduce Tablet Margins, Competition

By Don Reisinger  |  Posted 2012-08-16 Print this article Print

5. Amazon could be in for trouble

Amazon is already in some trouble since its Kindle e-reader-tablet hasn't been to continue strong sales in competition with Google Nexus 7 tablet. If Apple comes into the market with a 7.85-inch tablet, what can that possibly mean for the Kindle Fire? Look for Amazon to either launch a new 7-inch tablet soon or wait to see what Apple does. Amazon isn't dumb. And it knows that if it goes up against the iPad Mini with its current device, it'll fail miserably.

6. Margins will be hit hard

Across the board, tablet makers can expect their margins to get hit hard. Meanwhile, Apple won't have as much room between its component costs and the iPad Mini's price to generate generous on each sale. Look for margins and thus Apple's profits, at least on tablet sales, to drop significantly in the coming quarters.

7. It marks a shift in Apple's strategy

For years, Apple has lived on innovation. The company ignores competing products, sets its own strategic direction and delivers features that no other company can match in the near-term. With an iPad Mini launch, however, Apple would be engaging in a decidedly reactionary strategy, responding to a growing trend in the tablet market. It's an interesting change of pace for the company.

8. It'll make 7-inch displays obsolete

If the rumors are true, Apple is being careful not to call its smaller iPad the iPad 7. Apple correctly realizes that if it launches an iPad Mini with a 7.85-inch screen, competing 7-inch slates might be in deep trouble. Even 0.85 inches can make another device look obsolete and small in comparison. Consumers seeking the best bang for their buck could very well rush to Apple's side, leaving 7-inch slates in deep trouble.

9. It puts the onus on Apple to improve the big iPad

According to rumors, the iPad Mini could ship with a host of nice features found in Apple's bigger slate, including a Retina display, dual cameras and more. As a result Apple will need to go out of its way to improve the bigger iPad. There's a very real possibility that the iPad Mini could cannibalize at least so some degree Apple's larger iPad sales. The company must do everything it can to make sure that doesn't happen.

10. Get ready for less competition

All the previous points converge on one very important consideration: if Apple launches the iPad Mini in the coming months, there is a good chance that some of the current table makers will get out of the market thereby reducing competition. The strong competitors, like Google and Microsoft, will continue on. But smaller vendors, like LG, RIM, and maybe even Barnes & Noble might just get out of the space due to declining sales. Apple's iPad was a change agent. The iPad Mini will be no different.

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Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.

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