A new iPad model with a smaller form factor is an inevitability, inthe eyes of one analyst, though Apple is not expected to imminentlyrelease such a device. Shaw Wu with Sterne Agee has heard since 2009 that Apple was experimenting with screen sizes ranging from assmall as 4 inches to as large as 12 inches. The latest rumors havesuggested that Apple has placed more serious thought into releasing an iPad with a 7.85-inch display. In a note to investors on Tuesday, Wu said that a so-called "iPadmini" is a "question of when, not if" from Apple. He believes itwould make strategic sense for Apple to expand the iPad family toboost sales and ward off the competition. |
Wu believes that a smaller iPad would be "the competition's worstnightmare," as most companies already struggled to compete with theiPad when its starting price was $499. Now, Apple continues to sell the 16-gigabyte Wi-Fi-only iPad 2 for $399. So far, only Amazon has gained any traction, as Wu said the KindleFire has found "modest success" at the $199 price point. But Amazonis also believed to be selling the Kindle Fire at a loss as a way to increase the online retailers sales of other goods.
Later this year, Google is expected to offer its own 7-inch tablet priced at under $250. The device is seen as an effort to counterthe Kindle Fire, which runs its own heavily modified version of theGoogle Android operating system, tailored to sell content directfrom Amazon.com rather than Google Play. As for Apple's rumored 7.85-inch iPad, reports have suggested thedevice will sport a screen resolution of 1,024 by 768 pixels, whichis the same as the first-generation iPad and iPad 2. That wouldallow existing iPad applications to run on the new device withoutthe need for developers to modify them to accommodate a new screenresolution. Wu believes that if Apple were to release a new, smaller iPad, itwould become the new entry-level model and undercut the $399 priceof the iPad 2.
Such a move would expand Apple's total addressablemarket and help to round out the product family, he believes. "We do not sense that the release of an iPad mini is imminent andquite frankly, exact timing is difficult to predict," he said."However, we do believe it makes both fundamental and strategicsense for AAPL to address at some point.".
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