Apple Already Sells an iPad Mini
Calla is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Forgive my cynical confusion, but doesn’t Apple (NASDAQ: AAPL) already sell an iPad mini? In fact, wasn’t the 3.5-inch touch screen on the iPod Touch the precursor to the iPad? And how many consumers will be eager to shell out the $300 that the iPad mini is estimated to cost when they can find a pocket-sized version for $180 or less at any online retailer?
Overlapping Market
Amongst the swirl of iPad mini rumors piling into my inbox are a few on design: the iPad mini will take style cues from the iPod Touch more than the iPad. Design-wise, this product will be an iPod Touch – a much more optimistic Jonny Evans at Computer World called it an “iPod Touch Pro” -- except that that it doesn’t fit neatly in your pocket. Feature-wise, the iPad mini is expected to rank lower than the iPad: A4 or A5 chip, a camera with a few megapixels, possibly a Retina display, in other words, close to the fourth-generation iPod Touch.
Other analysts have parsed the possible impact of an iPad mini on standard iPad sales and concluded that a mini version would redirect some prospective -- maybe 10% -- iPad buyers but many more -- maybe 30% -- prospective Android tablet buyers. While that scenario suggests a net gain for Apple and its shareholders, it doesn’t consider competition with or from the iPod Touch. The falling iPod line is carried by iTouch sales, which accounted for half of the 7.7 million iPod units sold in Q2 2012. An iPad mini will cannabilize some iPod Touch sales, but the momentum could go the other way as well; shoppers may reconsider an iPod Touch once they see the price tag, cutting into estimated iPad mini sales. As small touch screen devices with similar design and specs, the market for these two product lines clearly overlaps and maybe a little too much.
Bottom Line
Apple may very well succeed in marketing what is essentially a large iPod Touch as a new product; the company has pulled similar feats before. As a market share play, the iPad mini is an excellent idea, though as Trefis points out, such a move goes partially contrary to Apple’s business model. However, as shareholders consider if and how an iPad mini would boost sales, they should consider how much the product overlaps with not only the existing iPad market, but also the existing iPod Touch market.
CallaMarie has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple. Motley Fool newsletter services recommend Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. If you have questions about this post or the Fool’s blog network, click here for information.
