iPad in hands (two-up, iPad, iPad mini)

KGI Securities analyst Ming-Chi Kuo has a very strong track record, having previously predicted a number of Apple products.

For example, he correctly assumed the MacBook Pro with Retina display would be offered alongside the existing models and called for the phasing out of the 17-inch MacBook Pro.

You’ll recall that Tim Cook during last week’s conference call advised against major hardware announcements until Fall. Be that as it may, Kuo now thinks Apple could at its upcoming five-day conference for developers refresh the MacBook notebook lineup with upgrades mostly revolving around a speedier Intel Haswell chips.

He is also expecting a new low-cost iPad mini model – the budget iPad mini, if you will – which should help the company fend off the onslaught of cheap Android tablets on the low-end…

Kuo suggests (via MacRumors) that Apple could reduce bill of materials of such a device by reducing internal storage to just eight gigabytes and dropping the rear-facing camera altogether.

A tweaked A5 processor could also help in achieving the target price of between $199 and $249, he wrote.

Prior to iPad mini 2 launch, Apple might roll out a more affordable iPad mini to compete with Android products.

To cut costs, Apple might push for lower component prices, use a more advanced process to produce the A5 processor, simplify metal casing production, remove the rear camera, cut storage to 8GB and find more component suppliers to lower costs.

We think this cheaper iPad mini retail for US$199~249.

Indeed, Samsung today released the third-generation Galaxy Tab tablet which presumably undercuts the iPad mini’s $329 starting price. It has a seven-inch 1,024-by-600 pixel resolution display, a 1.2GHz processor and 8/16GB of internal storage.

Samsung Galaxy Tab 3

As for the full-size iPad, the analyst expects a Fall refresh with an iPad mini-like design.

He doesn’t think the iPad 5 will improve Apple’s bottom line significantly as consumers continue to flock to the cheaper iPad mini models and with full-size iPads offering little by way of differentiating features over its little brother.

A Retina iPad mini, he writes, could be delayed until 2014 unless it enters mass production by October. According to his checks, that’s unlikely to happen at this stage due to yield issues with high-resolution 7.9-inch panels.

As for this cheaper iPad mini, whether or not it ends up being a tweaked iPad mini with cost optimizations or simply a discounted existing iPad mini remains to be seen.

iPad mini (three-up, front, back, profile, white)

It wouldn’t be out of character for Apple to discount the first-generation iPad mini after introducing a second-generation model. This has been Apple’s strategy with iPhones for quite some time, with the previous two generations typically seeing price drops following a next-gen model introduction.

On the other hand, Apple’s iPad mini margins are already slim and hurting the company’s profits. And we all know Apple doesn’t make gadgets unless it can squeeze out kinds of profits that are the envy of the industry.

Given the current state of Apple’s business, ongoing stock woes and its falling margins, we’d be surprised if Apple sacrificed its margins to compete with low-end devices from Amazon, Google and Samsung on price alone.

On a final note, Kuo doesn’t expect a Retina-grade MacBook Air anytime soon because of the technical challenges and cost concerns.

  • To be honest, doesn’t make any sense. iPad is prime quality, that’s why people can differentiate so easily from “cheap android.”

    And the so called “high end android tablets” match almost the iPad Mini price and can’t deliver the same construction quality and off course, user experience.

    Steve Jobs rule number one:
    youtube com/watch?v=Yu0qeb_rJYU

    Ps. With the iPad Mini 2, the iPad Mini 1 will be much more cheaper!
    It always work like this.

    • Guest

      Little bit pretentious there, aren’t we? Have a little bit wider view of things, it will do wonders.

      • wider view of things… right. I just don’t want to Apple fall on the mistake of being another brand who only care about profit and not about quality like the rest. I remember when Apple almost fall in the 90’s because of that. If you don’t understand Apples philosophy, just use other brand. If people are happy with other brands, why they care so much about Apple and how Apple works?

      • I think Apple has to look beyond profit (they have alot of money, really) – but look at dominating lower markets, for people who cannot afford (or simply won’t pay) the higher price tags that’s currently available for their devices.

        The more iPads out there, the better support for iPads, the better overall the iPad gets.

        I don’t see anything wrong with dropping the price significantly when a new model comes out – ie: $199 8GB iPad Mini, $249 16gb iPad Mini, $329 iPad Mini 2.

        Just because the iPad Mini came out in 2012, it doesn’t make it a “cheap product” with “no quality like the rest”. See where I’m going?

      • he wasn’t pretentious he was spot on. Hyundai lacks originality. they steal design cues from mercedes, bmw, and everyone else then throw their mishmash of design cues together and call it their own and spit out yet another piece of garbage design that the stupid american consumer eats up. and the fact samsung and hyundai are both korean and BOTH lack innovation, originality, and creativity does speak volumes.

    • Gorgonphone

      the C class mercs are pretty cheapo

  • $249 is perfect.

    • Gorgonphone

      $199 is um perfecter…lol

  • lmao

    Looks like Apple is going the route of competing with cheap crap, with cheap crap.. Steve Jobs would not agree one bit if he was still with us.

    • Gorgonphone

      all they have to do is lower prices on current products and create new higher end elite product segments for customer to lust after and bingo…

  • Timothy

    Goodness I hope not. Apple makes premium products that are costly for a reason. The budget iPhone is bad enough, but please Apple please, hold a standard with the iPads!

  • felixtaf

    There is no way Apple releasing another cheaper tablet. iPad mini will be cheaper after iPad Mini 2 release. Thats how it works with Apple.. We all kno that…

  • Guest

    I have never seen a bigger Apple Fanboy circle jerk in my life than what these comments entail hahahahaha

    • Gorgonphone

      Apple rules and you are MAD and that is SAD

  • Gorgonphone

    Apple just needs to lower prices.. thats the best way to increase accessibility and sales… DO NOT MAKE CHEPO VERSIONS that will hurt the brand image..

    • felixtaf

      I dont think Apple will lower the price. Prices for all flagship phones are above 600$ (But, I read HTC one is selling for ~570). Apple is known for brand popularity and price… So they are not gonna lower the price. Tim Cook promised some new hardwares are coming. Let see what we get, without keeping our hopes high….

  • Can’t help feeling apple products are no-longer premium… rather trying to be common… =(

  • Not gonna happen, as Apple doesn’t make “cheap” products.

  • Dr.Acula

    and here I thought that Apple wouldn’t lower its price because of its PRIDE.
    The product of Apple is amazing it is just that Samsung is getting better at
    making their products that is affordable thus increasing its sales. Samsung is
    soaring high because of their strategy ~Their business model. I remember Vivek
    Sood wrote in his blog and his best seller book The 5-star Business Networks
    that businesses should keep up the pace in innovation. And lo and behold is
    Apple doing both innovation and a change of tactics to win back those customers
    who fell for Samsung.