Mini iPad Rumors Continue to Stir Excitement for Apple

By Maxwell Fisher - June 19, 2012 | Tickers: AMZN, AAPL, GOOG, SNE | 0 Comments

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Rumors remain to circulate that Apple (NASDAQ: AAPL) is currently developing a new iPad, a smaller version of the traditional tablet computer, after photographs were released that suggest a prototype could be on the way in September.

According to Apple blogger John Gruber, who is well-known for his accurate posts, the new iPad is set to be just less than eight inches in length, as opposed to the longer length of 9.7 inches of the iPad and iPad 2. Gruber revealed this in a podcast with The Talk Show, building on the previous hype that Apple would release a smaller tablet device in the near future. However, Apple officials are reluctant to give away anything yet. Company executives Phil Schiller and Jony Ive claim Apple produces a vast range of prototype models, before selecting only a few to take to the market. So, we certainly don't have a sure guarantee that a smaller iPad is on the horizon.

But I do think there is a major possibility that these rumors could be true. Apple have yet to release an eBook reader, which would fit in with the idea of having a device smaller than a tablet computer but larger than a mobile phone. The recent success of the Kindle Fire, the popular eReader by Amazon (NASDAQ: AMZN), may have encouraged Apple to delve into the market. With the popularity of the brand, I have no doubt that an Apple e-book reader would sell well, particularly if the Apple App Store was integrated into the device. This would allow users to download books directly from the store along with music, podcast and film purchases.

It is not surprising that Amazon is wary of Apple's next move. Gruber has claimed that the retina display of the new iPad will be only slightly lower than that of an iPad or iPhone, making it suitable for reading. Previously, Amazon did not have to worry about competition from Apple in the eReader market. The former head of the company, Steve Jobs, was adamant that a product of such a size would simply be a frustratingly shrunk down iPad offering only limited functionality. He probably could not have predicted the success of the Kindle, which went against the odds to become a best-seller despite much negative speculation in the market.

Now it looks like the Kindle could be facing a strong opponent. Should Amazon be concerned? Yes. But it does have one clear strategy in keeping the price of the Kindle range low (assuming that an upgraded model will soon be available). My bet would be that Apple's version of an e-reader will be sold at a higher price than the Kindle, so Amazon will be able to dominate the lower end of the market with a cheaper alternative product.

I also don't think the new smaller iPad will be marketed as a "smaller iPad." Apple won't want to provide a cheaper iPad alternative, as this will likely see them lose potential revenue, particularly considering the new iPad 3 has just been released with a strong educational market. To keep the cost of the new device down, it may choose not to provide full web browsing capabilities with the product, making it similar to an iPod rather than an iPad. Apple would be entering a new market altogether, rather than attracting customers away from one it currently dominates.

If the product becomes a hit - which it will, if it is marketed correctly - Apple's already strong share price could be set to rise even further. An Apple e-reader would attract more revenue to the company through the penetration of a new market. April was a significant month for Apple investors: the value of its stock finally edged above Google (NASDAQ: GOOG) for the first time ever, reaching a new all-time high. However, such jubilation was short lived, as both stocks have actually retreated significantly since. Although many speculators are dubious about the sustainability of Apple's high share price, given that its rise has been very swift, I think the stock remains undervalued and will continue to rise until at least the end of the current quarter. Beyond that, it could increase even further if a new Apple e-reader is successfully marketed.

This is not the only new product expected to be revealed by Apple over the coming year. Some analysts also anticipate the introduction of a television product by Apple - although experts believe that such a saturated market is not the typical direction for the company. These rumors are coming about in part because back in February, officials at UK television channel ITV warned Apple against calling the product the iTV. ITV executives have insisted already they are unwilling to sell rights over the name. There are suggestions Apple will dub their television product the iPanel, incorporating aspects such as a media center with app store access into the device, to enjoy alongside traditional TV viewing.

If Apple does bring a TV product to the market, traditional television producers such as Sony and Samsung could lose a vast proportion of their market share. The mighty Apple knows no bounds when it comes to entering new technology markets, and could be a danger even to these multinational superpowers. Although neither company has yet to hint at how they will handle the pressures of competing with Apple in the television market, my bet is that they will step up their development and innovation programs. Apple does have the capacity to market a TV product successfully, but it will still be leaps behind these companies, which have recently brought 3D television to the mass market. Sony, Samsung and other television manufacturers need to get well ahead of the game now, or risk seeing their share prices take a hit in the future.

For now, my advice would be to invest in Apple and expect a significant increase in the company's share value by the end of the quarter. After this, a close eye should be kept on its performance. Apple's biggest threat on the horizon is in Google, which has just released a prototype of a pair of digital glasses offering much of the functioning of an iPhone. Apple must use its experience in hardware production to blow the Google Glasses out of the water for its stock to remain on an upwards trend.

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