Note: This is a guest post written by John Conaway
Recent reports have indicated that Apple has been gearing up production for their 7.85 inch iPad. The purpose of the iPad Mini will be to compete with products like Google’s, Amazon’s, and Rim’s “small tablet, small price” tablets. Though RIM’s Playbook has not met with success, Amazon and soon Google will be reaping the benefits of the small tablet, small price form factor.
In order for Apple to control all the oxygen in the tablet market, a 7.85 inch iPad Mini may be a necessity.
However, this kind of necessity could prove to be lethal not only to Apple’s competitors, but to Apple as well by:
1. Competing with their own iPad
The current 16-gigabyte 4G enabled iPad cost $310 to manufacture; leaving Apple with a 51 percent profit margin. Part of this profit margin is spent on things such as R&D, shipping, advertising, assembly, packaging, and software development. What ever is left is pocketed by Apple.
Unlike the iPad, the iPad Mini will not be able to bring in such a high profit margin if it is to compete with the cheaper tablets. Instead, Apple would be forced to either break even or to sell the device at a loss. Apple, like Google and similar to Amazon would have to rely on their content to bring in the extra cash flow.
The problem is that if a potential customer walks into the Apple store wanting a tablet and gets the iPad Mini, that would be another iPad that goes unsold and a loss for Apple since the iPad Mini’s profit margin is exponentially lower than the iPad’s profit margin.
The best case scenario for Apple is that the only people who buy the iPad Mini are those who are simply unable to afford to purchase the 9.7 inch iPad within any given circumstance. This way, Apple is able to under cut similar priced tablets by giving them an Apple branded tablet. The worst possible outcome is that customers who would have originally bought an 9.7 inch iPad decided to get the cheaper option instead, causing a backfire to Apple’s strategy.
In no way am I saying that Apple is going to self destruct, only that the iPad Mini may hurt iPad sales.
2. Deterring Apple’s Public Image
Apple prides themselves on offering high quality products. Usually, their products have a floor system in which they do not use low end hardware to power their products. A better way to put it, Apple does not make cheap products simply because they do not know how to use cheap components and not make it suck. As a result, what consumers get is a well made product with a high mark up price that people are willing to pay for.
The iPad is no exception to this rule. Apple has pumped some of the most high end hardware components such as a high resolution display and an over the top battery while still maintaining a healthy profit margin.
The iPad Mini on the other hand will possibly hit Apple’s floor and sink down under. First, Apple would have to give the device a pricing that is either lower or equal to Google’s Nexus 7 tablet. For this to happen, Apple will have to craft the iPad Mini without the dual cores processor and without a retina display. In fact, reports have indicated that the iPad Mini will be using the 2 year old screen technology found on the iPhone 3GS.
Though, this would not be the first time Apple has gone backwards with their products. An example of this can be taking from the iPod. The iPod has seen a number of transformations. The most notable include the iPod Shuffle and the iPod nano. Fortunately, the iPod Nano and iPod Shuffle were fundamentally different enough from the original iPod that consumers didn’t feel like they were simply buying a cheaper knock off, but instead buying a simply different product.
With an iPad Mini, the difference may not be large enough for customers not to feel as if what they have isn’t just a cheaper, less featured knock off of the iPad.
Note: This guest post was written by John Conaway. He is an All-American technology enthusiast who prides himself on offering others an in-depth look at today’s tech trends. For more articles similar to this, check out his website at Tech Analyzer
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