Few Apple products have been as contentious as the rumored iPad Mini. I can't recall the Mac Fanatic community getting more up in arms about anything Apple since that Newton that ran on depleted uranium and baby otter tears. So amidst the gnashing of teeth over the almost-certainly-to-be-released-next-month device, maybe its time to take a look at why an iPad Mini isn't just a good thing, but a great one.
Demand: Detractors say there's no desire for a smaller iPad; that if Apple releases one supplies will pile up at stores until unfortunate shoppers are buried in an avalanche of excess inventory, forcing Apple to purchase vast tracts of landfill space reclaimed from decomposed Atari 2600 E.T. game cartridges.
The numbers don't support this myopic view. In 2011, about 25 million tablets were sold in the US. 28% of these were for smaller tablets, largely the Kindle Fire sales which granted later fell precipitously...hey, can we start calling it the 'Kindle dwindle'?? What this figure tells us that if someone bought a tablet in 2011 that wasn't an iPad, in most cases they bought one that was smaller, cheaper and lighter. So some people (around 7 million of them) want one or all of these features in a tablet. That sounds like demand to me.
Over the same period (12/10 - 01/12), Apple's global tablet market share fell from 68% to 57.6% (Strategy Analytics, January 2012). These numbers don't suggest anything wrong with the iPad - the iPad 3 release was wildly successful - but they do show Apple losing ground to increased competition amongst an environment of growing tablet total unit sales.
We can also agree that Apple is a pretty desirable brand. Given Apple Care, the retail store presence, the perceived luxury value, the quality of the products, etc if a lot of people are opting for a Kindle Fire (shudder) just because of price, A LOT of them would move to Apple if there something at a comparable price point. I mean, Kindle has its many fans (hey Mark and Tom, if youre reading this), but its clear that a lot of people who cant afford a $500 iPad are choosing this over doing without.
Given ALL of this, let's say Apple releases an iPad Mini. Yes...I know you hate the very notion...just curl up in a fetal position with your classic 9" iPad if this gets stressful. And let's also say that from 2012 Q4 forward, the iPad Mini allows Apple to take back a measly third of the 'smaller tablet' market (they usually take 2/3rds, but let's be conservative). Based on 2011 sales figures and future sales expectations, we can estimate iPad Mini taking the following sales back from competitors:
50 million units (2013 US total tablet sales) X 28% (2011 small tablet market sales) x 33% (Apple's iPad Mini snags a third of mini tablet owners) = 4.62 million units "stolen" from competition, or about $1.4 billion in gross sales snatched from Amazon/Samsung/etc. And this doesn't include existing iPad owners picking up a second, or other factors...this is ONLY a rough estimate of how many people would buy an iPad Mini that otherwise might have picked up a Kindle Fire. $1.4 billion in sales careen from Amazon and Samsung right back to Apple. Huzzah. (Unless you're Amazon, I suppose.)
Can they do it? Is it worth it?
Offering consumers choices is usually a good thing. The big question is whether the reward is worth the risk. To decide this we have to look at development costs. Doing so points to three more major reasons an iPad Mini makes sense.
1. The cost to develop an iPad Mini is low: You know it and I know it building an iPad Mini is about making a smaller case and then figuring out how existing iPad/iPod/iPhone components should fit. This isn't a new product in terms of R&D... Apple wont spend billions to bring this to market. For all intents and purposes development costs are negligible maybe a few million to engineer the thing and get the vendor issues worked out.
2. The cost to produce an iPad Mini seems doable: Reliable sources reflect a production cost of approx. $150 for a $250 iPod Touch and $375 for a $499 iPad. To complete with the Kindle Fire and other 7 tablets, analysts think Apple needs to stick to a price point around $300. To keep the same profit margin, theyd need a production cost down around $200. This seems feasible - most components should cost about the same as existing iPod Touch or iPad parts. The real wildcard is the retina display, which was reported to cost $87 per unit for iPad 3 (VentureBeat, 3/12). More recent estimate suggest a current cost of around $70 per. There are also reliable reports of LG and Apple looking at cheaper, non-retina options for iPad Mini. Regardless, to get an iPad Mini to market it seems like Apple needs to be able to produce it for around $200. Given what we know, tough but possible.
3. The cost to roll out and advertise an iPad Mini is minimal: Apple utilizes a marketing strategy of using their ads to show off the latest and greatest item while simultaneously advertising ALL of their products. Apple ads drive consumers to the store/website, where Apple's product line is comprehensively displayed and sold. Apple doesnt necessarily pay more for ads when they release a new product, they use their existing ad budget to roll new products in. Whether this fall's ads feature the iPad 3, an all-new iPad 4 (fingers crossed) or an expanded iPad family (if there's a single ad featuring an iPad mini in diapers I swear I'm slitting my wrists), the advertising cost to Apple is probably about the same with or without an iPad Mini.
Inarguable conclusion: an iPad Mini makes sense.
It just does, get over it.
Looking at this data, if Apple can overcome production cost issues...this thing will cost a few million to introduce in exchange for billions in increased sales.
You still don't want them to release a mini?
Why? For the love of all that's holy, why the blankety blank not?? When a company dominates a market, and that company has $150 billion in cash sitting in the bank, and they're watching people eagerly buy up a similar-but-slightly-smaller variation of their product, shouldn't they compete? They have the resources and the brand name. If they try and fail, iPad Mini goes the way of the 24" iMac. But if they succeed, they'll make billions, enabling them to develop ever bigger and better gadgets for you (or smaller and cheaper, as the case may be).
I've spent a couple of months thinking about this, and wondering why the fundamentalist Mac Fanatic community (the Mac Taliban, if you will, lol) is soooooo against an iPad Mini. At first I thought they were being protective of Apple, but that's rubbish. One MacBook Pro Retina in a million gets image retention and they're all over the Internet griping, driving customers away from the product and the brand...so they clearly don't care about pushing people away from their beloved Apple.
Maybe it's a subtle bigotry. Maybe Mac fanatics see anyone whod buy a 7 tablet as unworthy. Or maybe its that old convention that Apple is the alternative brand enjoyed by a mass minority of computer users. Perhaps an iPad Mini detractor is like a 1980s fan of The Cure, who watched 1992s Friday Im In Love propel their beloved indie band into the pop rock scene. (Ill admit to still cringing at the memory of millions of scrunchies suddenly appearing at concerts.)
On the pro-mini side, if you're wondering why I'm so for a Mini, it's for this simple reason: I love Apple, but I also own Apple stock. As an investor, spending a few million to potentially make billions is what we call a "no brainer." I'm pro-iPad Mini for the simple reason that it's one of the best ways to get my shares from $675 to the somewhat-universally-expected $1000. And Im critical of anti-mini posters for the same reason. These are the same people who wrote of the HORRORS the iPhone would bring to Apples bottom line. If Steve Jobs had listened to people like this, Apple stock would still be sitting around $80 per share (where it was in 2007 before iPhone) and not $700 (where it is today).
Whatever the reasons for being anti- or pro-mini, Mac fans should take a deep breath. Securities analysts are on the ground in Asian production facilities, and the 7-ish inch screens rolling off Apple production lines definitely aren't a novel new Apple TV stand. The iPad Mini is coming, and it'll probably be a huge success.
So get on board...tell people you think it'll be great. Best case, you'll look prescient. Worst case, you say the market shifted back toward bigger screens, allowing Apple to move to a possible future iPad Max.
Davey Williams
Los Angeles, CA
Occasional writer and .00001% owner of Apple, Inc.
Demand: Detractors say there's no desire for a smaller iPad; that if Apple releases one supplies will pile up at stores until unfortunate shoppers are buried in an avalanche of excess inventory, forcing Apple to purchase vast tracts of landfill space reclaimed from decomposed Atari 2600 E.T. game cartridges.
The numbers don't support this myopic view. In 2011, about 25 million tablets were sold in the US. 28% of these were for smaller tablets, largely the Kindle Fire sales which granted later fell precipitously...hey, can we start calling it the 'Kindle dwindle'?? What this figure tells us that if someone bought a tablet in 2011 that wasn't an iPad, in most cases they bought one that was smaller, cheaper and lighter. So some people (around 7 million of them) want one or all of these features in a tablet. That sounds like demand to me.
Over the same period (12/10 - 01/12), Apple's global tablet market share fell from 68% to 57.6% (Strategy Analytics, January 2012). These numbers don't suggest anything wrong with the iPad - the iPad 3 release was wildly successful - but they do show Apple losing ground to increased competition amongst an environment of growing tablet total unit sales.
We can also agree that Apple is a pretty desirable brand. Given Apple Care, the retail store presence, the perceived luxury value, the quality of the products, etc if a lot of people are opting for a Kindle Fire (shudder) just because of price, A LOT of them would move to Apple if there something at a comparable price point. I mean, Kindle has its many fans (hey Mark and Tom, if youre reading this), but its clear that a lot of people who cant afford a $500 iPad are choosing this over doing without.
Given ALL of this, let's say Apple releases an iPad Mini. Yes...I know you hate the very notion...just curl up in a fetal position with your classic 9" iPad if this gets stressful. And let's also say that from 2012 Q4 forward, the iPad Mini allows Apple to take back a measly third of the 'smaller tablet' market (they usually take 2/3rds, but let's be conservative). Based on 2011 sales figures and future sales expectations, we can estimate iPad Mini taking the following sales back from competitors:
50 million units (2013 US total tablet sales) X 28% (2011 small tablet market sales) x 33% (Apple's iPad Mini snags a third of mini tablet owners) = 4.62 million units "stolen" from competition, or about $1.4 billion in gross sales snatched from Amazon/Samsung/etc. And this doesn't include existing iPad owners picking up a second, or other factors...this is ONLY a rough estimate of how many people would buy an iPad Mini that otherwise might have picked up a Kindle Fire. $1.4 billion in sales careen from Amazon and Samsung right back to Apple. Huzzah. (Unless you're Amazon, I suppose.)
Can they do it? Is it worth it?
Offering consumers choices is usually a good thing. The big question is whether the reward is worth the risk. To decide this we have to look at development costs. Doing so points to three more major reasons an iPad Mini makes sense.
1. The cost to develop an iPad Mini is low: You know it and I know it building an iPad Mini is about making a smaller case and then figuring out how existing iPad/iPod/iPhone components should fit. This isn't a new product in terms of R&D... Apple wont spend billions to bring this to market. For all intents and purposes development costs are negligible maybe a few million to engineer the thing and get the vendor issues worked out.
2. The cost to produce an iPad Mini seems doable: Reliable sources reflect a production cost of approx. $150 for a $250 iPod Touch and $375 for a $499 iPad. To complete with the Kindle Fire and other 7 tablets, analysts think Apple needs to stick to a price point around $300. To keep the same profit margin, theyd need a production cost down around $200. This seems feasible - most components should cost about the same as existing iPod Touch or iPad parts. The real wildcard is the retina display, which was reported to cost $87 per unit for iPad 3 (VentureBeat, 3/12). More recent estimate suggest a current cost of around $70 per. There are also reliable reports of LG and Apple looking at cheaper, non-retina options for iPad Mini. Regardless, to get an iPad Mini to market it seems like Apple needs to be able to produce it for around $200. Given what we know, tough but possible.
3. The cost to roll out and advertise an iPad Mini is minimal: Apple utilizes a marketing strategy of using their ads to show off the latest and greatest item while simultaneously advertising ALL of their products. Apple ads drive consumers to the store/website, where Apple's product line is comprehensively displayed and sold. Apple doesnt necessarily pay more for ads when they release a new product, they use their existing ad budget to roll new products in. Whether this fall's ads feature the iPad 3, an all-new iPad 4 (fingers crossed) or an expanded iPad family (if there's a single ad featuring an iPad mini in diapers I swear I'm slitting my wrists), the advertising cost to Apple is probably about the same with or without an iPad Mini.
Inarguable conclusion: an iPad Mini makes sense.
It just does, get over it.
Looking at this data, if Apple can overcome production cost issues...this thing will cost a few million to introduce in exchange for billions in increased sales.
You still don't want them to release a mini?
Why? For the love of all that's holy, why the blankety blank not?? When a company dominates a market, and that company has $150 billion in cash sitting in the bank, and they're watching people eagerly buy up a similar-but-slightly-smaller variation of their product, shouldn't they compete? They have the resources and the brand name. If they try and fail, iPad Mini goes the way of the 24" iMac. But if they succeed, they'll make billions, enabling them to develop ever bigger and better gadgets for you (or smaller and cheaper, as the case may be).
I've spent a couple of months thinking about this, and wondering why the fundamentalist Mac Fanatic community (the Mac Taliban, if you will, lol) is soooooo against an iPad Mini. At first I thought they were being protective of Apple, but that's rubbish. One MacBook Pro Retina in a million gets image retention and they're all over the Internet griping, driving customers away from the product and the brand...so they clearly don't care about pushing people away from their beloved Apple.
Maybe it's a subtle bigotry. Maybe Mac fanatics see anyone whod buy a 7 tablet as unworthy. Or maybe its that old convention that Apple is the alternative brand enjoyed by a mass minority of computer users. Perhaps an iPad Mini detractor is like a 1980s fan of The Cure, who watched 1992s Friday Im In Love propel their beloved indie band into the pop rock scene. (Ill admit to still cringing at the memory of millions of scrunchies suddenly appearing at concerts.)
On the pro-mini side, if you're wondering why I'm so for a Mini, it's for this simple reason: I love Apple, but I also own Apple stock. As an investor, spending a few million to potentially make billions is what we call a "no brainer." I'm pro-iPad Mini for the simple reason that it's one of the best ways to get my shares from $675 to the somewhat-universally-expected $1000. And Im critical of anti-mini posters for the same reason. These are the same people who wrote of the HORRORS the iPhone would bring to Apples bottom line. If Steve Jobs had listened to people like this, Apple stock would still be sitting around $80 per share (where it was in 2007 before iPhone) and not $700 (where it is today).
Whatever the reasons for being anti- or pro-mini, Mac fans should take a deep breath. Securities analysts are on the ground in Asian production facilities, and the 7-ish inch screens rolling off Apple production lines definitely aren't a novel new Apple TV stand. The iPad Mini is coming, and it'll probably be a huge success.
So get on board...tell people you think it'll be great. Best case, you'll look prescient. Worst case, you say the market shifted back toward bigger screens, allowing Apple to move to a possible future iPad Max.
Davey Williams
Los Angeles, CA
Occasional writer and .00001% owner of Apple, Inc.
