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Yesterday came more evidence that the 7.9-inch iPad mini is outselling Apple’s larger tablet. The findings show increasing sales of the iPad mini amid declining demand for the 9.7-inch iPad. Between December and January, shipments of 9.7-inch panels (such as the iPad) fell from 7.4 million to 1.3 million units. In contrast, shipments of 7.9-inch display panels rose to more than five million units, according to the findings by hardware research firm NPD DisplaySearch that echo recent supply chain chatter.

The changing levels of demand suggests consumers prefer the smaller footprint of smaller tablets. However, this faster adoption of the iPad mini over its big brother is causing analysts to revise expectations for 2013 tablet sales…

The research firm noted Thursday that Apple had originally planned to sell 40 million iPad mini units and 60 million iPads in 2013, for a total of a hundred million iPads this year.

However, the reality seems to be the reverse, as the iPad mini has been more popular than the iPad. We now understand that Apple may be planning to sell 55M iPad minis (7.9-inch) and 33M iPads (9.7-inch) in 2013.

In short, NPD virtually cut in half estimated 2013 shipments of the full-size iPad. Also, their new estimate now calls for a total 88 million iPads in 2013.

The growth of iPad mini shipments is likely to continue, given production for the smaller tablet was constrained due to production of the display – a factor which apparently was resolved in February.

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While debate over whether the iPad mini would cannibalize sales of the larger iPad has been ongoing from the moment Apple announced the 7.9-inch device, the company has always downplayed the impact. In January, Apple execs said new products have often hurt sales of preceding devices, pointing to the iPhone and iPad prompting slower sales of the iPod and Mac.

However, these latest shipment numbers may damage Apple’s belief the iPad mini would serve as an extra tablet, enticing some consumers who specifically wanted a smaller device. The larger iPad would continue to serve another segment looking for other features.

iPad ad (Alive, education 001)

This belief of serving two segments was evident in Apple’s early decision to forego a Retina display for the iPad mini. The blow-back from consumers was immediate, clearly showing buyers want nothing to do with segmentation. Hence reports that the next iPad mini will also include the better display.

The morphing of the iPad and iPad mini into just the iPad is equivalent to the iPhone 5, iPhone 4S and iPhone 4S being viewed as simple the iPhone. While Apple would prefer to maintain these discrete segments of products that could sell at different price points to different consumers, that’s just not reality.

As a number of reports have illustrated, consumers are more apt to purchase the $99 or free iPhone 4S or iPhone 4, rather than the more profitable and also pricier iPhone 5.

In your view, is the iPad mini a better buy over its bigger brother?