iPad Mini Could Reduce Tablet Margins, Competition
iPad Mini Is Coming: 10 Ways It Could Change the Tablet Market
Apple's iPad Mini has been the source of many rumors over the last several weeks. However, in the last couple of days, the device has received far more attention with claims that it'll ship later this year with a design that effectively turns it into a big iPod Touch. According to other reports, the iPad Mini will ship with a 7.85-inch screen and come in at a much lower price than Apple's larger slate.
For its part, Apple hasn't said that it will, in fact, launch an iPad Mini later this year. That said, all signs point to the company doing so. From a strategic perspective, launching the iPad Mini could help Apple stave off any attempts by its competitors to grab too much market share at the lower end of the tablet market.
Given Apple's success with other mobile products, adding another device to the mix should only increase its revenue and profits. Simply put, launching an iPad Mini sounds like a great idea for Apple.
For the tablet market, however, the device could have a partially positive, partially negative impact. In fact, the iPad Mini will change the tablet market in a big way.
These are the reasons an iPad Mini will change the tablet market.
1. It increases Apple's leverage
If nothing else, an iPad Mini would only increase Apple's leverage in the marketplace. The company would have more tablets to offer; its sales would be higher; and vendor partners would be required even more to play nice. It could help Apple increase its power in key relationships across the industry.
2. It hurts the Nexus 7's value proposition
If the iPad Mini does finally hit store shelves, Google's Nexus 7 could be in for trouble. After all, the Nexus 7 is the top 7-inch tablet on the market right now. If Apple's tablet comes in with a slightly larger screen and some special features Google's offering can't match, the Nexus 7 could find its sales slip quite quickly.
3. It'll drive pricing down
Whenever Apple enters a market, it tends to force competitors to drop their prices. The company does so by offering what are perceived to be higher-end products at prices that can match competitors' products. As a result competitors must drop their own prices to keep up. That may be great for tablet buyers, but it's not necessarily a good thing for all interests.
4. Developers will continue to flock to Apple
If Apple can launch a new iPad that increases its market share in the mobile space, it won't be long before developers dedicate less of their time to producing applications for other operating systems, such as Windows 8 commit more of their time and resources to produces iOS applications. Software developers follow the consumers. With an iPad Mini launching, the consumers will flock to Apple's products.
iPad Mini Could Reduce Tablet Margins, Competition
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.