iPad Mini would cannibalize iPad sales: analyst

But that's not necessarily a bad thing: competing tablets would be only a minor problem for Apple

If Apple launches a pint-sized version of its best selling iPad tablet, it could grab sales not only from competitors but from Apple itself.

Such sales cannibalization of existing iPad models would be minor and would be more than offset by the rewards to Apple for expanding its line, according to Brian White, an analyst with Topeka Capital Markets, who has been beating the drum about a smaller iPad since last fall when he coined the term iPad Mini for the gadget.

"We would expect the cannibalization of the current iPad by the 'iPad Mini' to be relatively minor and potentially in a range of just 10-20 percent, while the market opportunity could eventually be larger for the 'iPad Mini' given the growth trends in developing countries," White writes in a research note released Thursday.

White maintains that the Mini would be a hit in developing countries, like China. In the developed world it would also be popular with price-sensitive consumers, those who find  the smaller form more convenient, educators who will like the price -- expected around US$250 -- and younger children who will find a smaller device easier to handle than a 10-inch tablet.

White also believes a market segment will develop for "two-iPad families." "[W]e would not be surprised if certain consumers end up owning both a regular-sized iPad and an 'iPad Mini,' swapping between the two devices for different occasions," he writes. White notes that iCloud further enables content on the two iPads to be automatically duplicated and easier to share among Apple devices.

Admittedly, the profit margins on a smaller iPad will likely be smaller than those of its Big Brother, but White contends that gap can be managed by omitting features from the Mini found in the larger iPad.

At US$250, the Mini would still be more expensive than its US$199 competitors, Google's Nexus 7 and Amazon's Kindle Fire, but White argues that the Mini would be a "higher quality" product that offers consumers an overall better experience than its competitors, as well as a robust ecosystem.

"Ultimately, we view the potential addition of the“iPad Mini” as a long-term positive for Apple’s iPad franchise and necessary to keep competitors from trying to control the lower price point segment of the market," he concludes.

Apple vs. Apple

While no company is enamored with undercutting the sales of existing products with new products, Apple has shown in the past that it will tolerate cannibalization if the Big Picture demands it. That was the case when it introduced the iPhone, which it knew would eat into iPod sales.

"It's better that Apple cannibalizes itself than anyone else cannibalizes Apple," observes Bob O'Donnell, IDC's research vice president for clients and displays. "You want your customers to use your stuff."

If cannibalization gives Apple domination of the total tablet market, then cannibalization is acceptable to the company. "I think Apple likes owning a market," O'Donnell adds.

"It's in strong control of the tablet market and if they do this, it will put incredible competitive pressure on everybody else," he says. O'Donnell says a US$249 iPad Mini presents a strong challenge to US$199 tablets are "because people would rather pay a few bucks more and get an iPad than to get something else."

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

John P. Mello Jr.

PC World (US online)
Comments are now closed.

Latest News Articles

Most Popular Articles

Follow Us

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Resources

Best Deals on GoodGearGuide

Compare & Save

Deals powered by WhistleOut
WhistleOut

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?