Following yesterday’s report by Bloomberg that Apple is planning to debut a smaller, inexpensive iPad by year-end, The Wall Street Journal (an unofficial Apple mouthpiece) on Wednesday cited the obligatory “people familiar with the matter”, reporting that Apple’s component suppliers in Asia are preparing for mass production of the iPad mini in September. Get your sandpapers ready!
Author Lorraine Luk writes:
Officials at the component suppliers, who declined to be named, said this week that Apple has told them to prepare for mass production of the smaller tablet.
Two of the people said that the tablet’s screen will likely be smaller than eight inches. The iPad’s screen measures 9.7 inches, unchanged since the first model was released in 2010.
Apple is reportedly tapping LG Display and AU Optronics to supply displays for the device. A report Monday by a Chinese news site speculated that a 7.85-inch iPad mini will have a Sharp-made panel and an attractive price point between $249 and $299.
Looks like the iPad mini is happening after all as big media is throwing its credibility behind the rumor. The Journal first reported on an inexpensive iPad with a smaller display back in January.
The $249-$299 sweet spot is obviously the key here. If Apple manages to pull it off, the iPad will explode and rivals will conceivably run for the hills.
With the iPad 3 gross margin an estimated 37 percent, Apple has plenty of room to engineer a smaller iPad with a non-Retina display at 1024-by-768 resolution and smaller storage and tap economies of scale to make a decent profit on a $249 device.
As Bloomberg put it, it would be “competitors’ worst nightmare”.
Why?
Because Amazon is selling its Kindle Fire at a loss and making up for it with content sales. Likewise, Google’s Nexus 7 is also estimated to break even, with Google hoping to monetize users with advertising.
But in addition to making money on the hardware, Apple has the most content-rich ecosystem out there and will continue collecting its customary 30 percent cut whenever iPad mini owners buy apps, songs, movies, e-books and other media.
Summing up, should Apple unveils a similarly priced iPad, it’ll conceivably be game over for both Amazon and Google. Let’s not forget that both companies are putting their own brands on this front and center so the failure will no doubt undermine the credibility of Android and Google’s tablet strategy.
Are you excited about the smaller, cheaper iPad?