Callum is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Amazon.com (NASDAQ: AMZN) recently released its new Kindle Fire HD series, which will come in at around $199-$299 a pop depending on the size (7 inch versus 8.9 inch). Google (NASDAQ: GOOG) released its Nexus 7 not to long ago, and that got great reviews and is also priced at $200. This is significantly cheaper than Apple's (NASDAQ: AAPL) iPad, so Apple may have a pricing war on its hands. Or maybe not, as rumors have come out saying Apple may release an iPad Mini sometime later this year. If these rumors turn out to be true, Apple will reap the benefits for a long time.
Mini-Me Packs a Punch
The reason why the iPad Mini matters is because the iPad comes in at around $600, which means consumers will have to pay 3 times as much for an iPad than a Nexus 7 or Kindle Fire HD. The Nexus 7 got great reviews, with cnet.com giving it 4 out of 5 stars. On that same website the iPad 3 got 4 out of 5 stars as well. Cnet.com hasn't rated the Kindle Fire HD yet, but had good things to say about it, especially when stacked against the competition,
"on the 8.9-inch front, the baseline 16GB Kindle Fire HD doesn't have a lot of competition. The Samsung Galaxy Tab from 2010 had an 8.9-inch variant, and you can find a few other oddball 8.9-inchers, but no serious direct competition comes to mind here. The older, 10-inch iPad 2 with 16GB of memory is the most obvious next option, but at $399 it's $100 more than the $299 big-screen Kindle Fire HD. Of course, the big wildcard here is the rumored iPad Mini".
Competition in the tablet market is heating up and the stakes are getting higher. Now more than ever Apple needs to stay on its toes and remain very competitive. And it can do this by offering a cheaper, smaller iPad Mini which can compete with the likes of the smaller and cheaper tablets being brought to the market. Consumers don't buy the best item on the market, they buy the best value on the market.
Peter Misek of Jefferies thinks that on October 10 Apple will release invitations to an event later in the month in which Apple will release a smaller iPad, the iPad Mini. Digitimes thinks that 4 million units will be shipped per month for its supply chain, according to Digitimes' "sources from the upstream supply chain." From Digitimes;
"Rumors are circulating in the IT market that Apple will launch its 7.85-inch iPad in October with a thinner screen frame to allow the device to feature a bigger display area than other competing products and will also feature a resolution similar to that of iPad 2."
Analysts think that Apple will price this around $299, which would make it very competitive with Google and Amazon. It would also be able to compete very aggressively with Microsoft Corp's new Surface tablet, and other manufactures using Windows 8 OS on their tablets.
Size and Scale
The reason why this market is important is because Google is expected to sell 8 million Nexus 7's by the end of 2012, according to Tech-thoughts.net. The Nexus 7 will have been out for 6 months by the end of December. Gartner predicts a slightly lower number, but still, anywhere around 6-8 million is a pretty big market. Combined with Barclay's saying they see 14.3 million Amazon tablets sold by the end of 2012 and 21.9 million by the end of 2013. That is a huge market in which Apple can continue to gobble up market share. If they release an iPad Mini, that is a very bullish move and a great sign that management is up for the challenge.
I am an Apple shareholder, and would be delighted to see an iPad Mini come out before the holiday season. I think most analysts, investors, and consumers would agree that a cheaper iPad is a great deal for everyone, except the competition. The tablet market is still young, and wild cards like Microsoft or more established players like Google and Amazon could be problematic for Apple, but Apple seems to be on top of the ball as far as managing its pipeline and staying on top. I'm bullish on Apple and its future products.
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