Apple's Mini Doesn't Need Mega Success
Apple and its investors shouldn't expect a smaller iPad to make a killing in such a saturated market, said Trip Chowdhry, senior analyst for Global Equities Research. "The 7-inch market is highly congested. This is an area that is dominated by some very successful products."
10/17/12 7:00 AM PT
Early adopters of the iPhone 5 probably don't have much time to bask in the glory of owning the latest Apple product. The company sent out invitations to an Oct. 23 event in San Jose, when it is expected to launch a smaller, more affordable tablet.
The invitation reads, "We've got a little more to show you," with the "little" implying a smaller iPad is truly on its way. The 7-inch device is often referred to as the iPad Mini, although Apple has not confirmed such a product nor its name. The light version of the company's 10-inch iPad would take on competitors like Amazon's Kindle Fire and Google's Nexus 7.
Media reports also predict that the company also plans to launch a new version of the Mac mini and a 13-inch version of the Macbook Pro at the event as well.
Details about a smaller tablet device are scarce, although most rumors don't expect it to have any revolutionary features that don't already appear on the iPad.
Price Has To Be Right
It's also still unknown at what price Apple would offer a smaller iPad. Amazon, which makes money off the Kindle largely by selling content for the tablets rather than the device itself, is able to offer the device starting at US$199. Google also sells an 8GB Nexus 7 tablet to match Kindle prices. Considering Apple recently released a $299 iPod Touch, though, it's unlikely the company's 7-inch tablet price point would go as low as its competitors.
Given that, Apple and its investors shouldn't expect a smaller iPad to make a killing in such a saturated market, said Trip Chowdhry, senior analyst for Global Equities Research.
"The 7-inch market is highly congested," he told MacNewsWorld. "The company and Apple fans are, as usual, pumping lots of hot air into this announcement, but this is an area that is dominated by some very successful products."
That's not to say a 7-inch iPad would be a bad product. It will most likely be a great one, said Chowdhry. In order to immediately stand out from the crowd, though, Apple has to come through with an innovative game-changer, and he doesn't see that happening with this product launch.
"What is the groundbreaking technology that they're going to bring in with this one?" he asked. "It's going to be a good product, but not groundbreaking. With the current backdrop, with the economy where it is, and the company just releasing the iPhone 5, he consumer has less disposable income to spend on new products. It hasn't even really had time to digest the iPhone 5."
One relatively low-selling product won't break the bank at Apple, which is sitting on a cash reserve of around $100 billion. If sales don't go as well as the company is hoping, however, it should be a reminder that Apple is most successful when it creates markets rather than enters them behind their rivals, said Chowdhry.
"Apple making a product by default like this doesn't make a hit," Chowdhry pointed out. "Apple being innovative is what makes the hits. The company needs to remember that going forward."
Whether in the mini tablet business or elsewhere, Apple is constantly competing with Samsung. The two companies are currently engaged in multiple global, high-profile patent battles.
Though for a while, it seemed Apple and Samsung were able to put aside their differences and work together on mobile chip development and design. Samsung is a major supplier for Apple in the area, creating a multibillion-dollar partnership between the two. Now, though, the fighting is infiltrating into the business relationship.
Apple is reportedly pulling away from Samsung as much as possible on the chip end of the business, according to a report in the Korea Times. Apple has reportedly been looking to other suppliers, including Taiwan Semiconductor Manufacturing Company, the world's largest contract chip manufacturer. The tension increased last week when Apple snagged one of Samsung's top semiconductor designers, Jim Mergard.
As the patent battles continue to wage and the mobile space becomes even more competitive, it shouldn't come as a surprise that Apple wants out, said Roman Tsibulevskiy, patent attorney at Goldstein Law Offices.
"Samsung and Apple had a close business relationship until all this litigation started, and now Apple is reassessing the scope of this relationship," Tsibulevskiy told MacNewsWorld. "Apple limited their relationship to only chip supply from Samsung. They can also see if there are other chip suppliers who don't compete with them in the mobile arena."
Ultimately, the fight on all fronts is going to continue between the tech giants until it's no longer possible -- but no one should hold their breath for that to happen, he pointed out.
"One way I can see this thing ending is when the costs, whether financial or others, outweigh the benefits," he noted. "But at the same time, both companies have plenty of cash so it's possible this can go on for a while. I guess time will tell."
Apple did not respond to our request to comment for this story.