iPad Mini Could Be Apple's New Cash Cow: 10 Reasons Why

 
 
By Don Reisinger  |  Posted 2012-10-16 Email Print this article Print
 
 
 
 
 
 
 

NEWS ANALYSIS: Apple’s iPad Mini makes a lot of sense for the company, despite the late Steve Jobs objections to smaller-sized tables. The iPad Mini could prove to be a new cash cow for the company.

Apple has announced that on Oct. 23, it will hold a special press event. The company hasn’t said what it has planned for that event; its invitation said only that it has “a little more to show you.” But speculation abounds that the company will show off the long-awaited iPad Mini. That device, according to reports, will come with a 7.85-inch screen, and could deliver storage of between 8GB and 64GB. There’s even talk of the iPad Mini coming with support for 4G LTE in some versions.

Of course, Apple is already successful in the tablet market. The company’s current iPad is the bestseller in the space and at a starting price of $499. It’s also one of the more expensive options. But as an increasing number of consumers and business users warm to tablets, Apple’s device is quickly racking up many of the sales.

Given that success, and considering there is less revenue to be generated from the iPad Mini, some might wonder why Apple would want to launch a new tablet. Further inspection, however, reveals that there are several reasons for launching the iPad Mini. And with the right strategy, there’s no reason to suggest the device won’t be successful.

Read on to learn why Apple will launch an iPad Mini:

1. It doesn’t cost much

The beauty of launching an iPad Mini is that it doesn’t cost Apple much to make it. The iPad Mini is the smaller version of the company’s larger iPad, which means it’s cheaper to produce. And since Apple has more than $100 billion in cash on hand, investing in such a device is a pittance. Simply put, there’s no financial risk for Apple to launch an iPad Mini.

2. Blame Google and Amazon

If it weren’t for Google and Amazon, it’s hard to say if Apple would ever launch an iPad Mini. After all, the Nexus 7 and Kindle Fire HD are dominating the lower-end of the tablet market. And Apple, always looking to snag more revenue, knows it. The last thing the company wants now is to continue to allow Google and Amazon to rake in the cash without at least trying to take it all for itself.

3. Ditch the down-and-out competitors

Although the iPad Mini likely won’t kill off the Nexus 7 or Kindle Fire, there’s a good chance that it will do real damage to other tablets on the market that just can’t cut it in the 7-inch segment. Devices like the Barnes & Noble Nook or even the Samsung Galaxy Tab might quickly fall behind. When Apple enters a market, there’s really only room for one or two alternatives. All others typically tend to fall by the wayside.

4. Apple knows it needs to appeal to the budget shopper

Apple understands that its iPad, while high-powered, isn’t really appealing to budget-conscious customers. Apple can fix that by launching the iPad Mini. According to reports, the cheapest version of that device will ship for only $249. Not bad.

5. The holidays are coming

Wondering why Apple would launch the iPad Mini right now? Look no further than your calendar. The busy holiday-shopping season is nearly upon us. Knowing full well that many folks will be heading to stores for tablets, Apple wants to give as many customers as possible the opportunity to buy one of its slates.

6. The financial marks are getting harder to hit

Apple is feeling pressure from investors. Each quarter, Wall Street sets high marks for revenue and profits, and hitting those levels is getting a bit more difficult with each passing period. By launching an iPad Mini, Apple can tap into a new revenue source and increase its chances of hitting the high marks set by Wall Street.

7. The iPod is dying

Apple’s iPod is dying. Once it’s finally put out to pasture it will take away the billions of dollars of revenue it used to generate for Apple. With an iPad Mini, Apple can cut off some of those losses. In addition, a smaller iPad might be a replacement option for customers who might otherwise buy the somewhat expensive iPod Touch. Believe it or not, the iPad Mini might just cannibalize iPod Touch sales before it hurts the new iPad.

8. It brings a new generation into the fold

One of the nice things about cheaper, smaller tablets is that they appeal to kids. In many cases, parents buy the cheaper slates for their children so they won’t play with or break their own, more expensive options. Apple, seeing an opportunity there, could be trying to capitalize on that trend. After all, the sooner Apple can get younger generations to use its products, the more likely it’ll be able to keep them as customers for years to come.

9. Remember the Halo Effect

Apple continues to sell new mobile products because it understands that those devices typically help it sell other devices. iPad owners are more likely to be iPhone owners. Folks who buy those products might be more willing to buy a Mac. That strategy of capitalizing on the so-called “Halo effect” has proven quite profitable for Apple so far. It will likely only continue in the coming years, thanks to the iPad Mini.

10. A design test case?

According to some reports, the iPad Mini will ship with a new design concept that might make its way to Apple’s new iPad next year. If so it’s possible that Apple might want to work out the kinks with its smaller slate. What works? What doesn’t? What sort of features would customers want in a new, larger iPad design? For a company like Apple that knows any product will sell, a product sometimes serves two purposes – it generates financial gain and acts as the inspiration for future launches.

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