Apple will sell a smaller iPad or be disrupted from the bottom up by Google’s Nexus 7

“Apple watcher Ryan Jones, who blogs at IAmConcise, has an interesting graphical argument for a smaller, less expensive iPad. In his post today, The Reason for the iPad Mini, Jones refers to Tim Cook’s recent statement that Apple will ‘one thing we’ll make sure is that we don’t leave a price umbrella for people’ in the tablet space,” Anthony Wing Kosner writes for Forbes. “A price umbrella is the cover that a market leader provides other companies by establishing a premium price for their products. Competitors can enter the market at lower price points and disrupt the leader’s dominance, in Jones words, ‘from the bottom up.'”

“Apple has effectively defended itself from bottom up competition twice before, Jones points out, with the iPod and iPhone,” Kosner writes. “In the case of the iPod, it filled the bottom niche with the Nano and Shuffle. With the iPhone, Apple has been able to get the price down to $0 by continuing to sell the 3GS with its $400 price tag fully subsidized by the carriers.”

Kosner writes, “Jones makes his point by charting every current model of iPhone, iPod, and iPad by price (see above). It’s a very compelling visualization because he lets the data—the missing triangle in the iPad cluster—make his argument for him.”

Read more in the full article here.

Related articles:
The iPad mini: Why now is the perfect time for a small Apple tablet – July 19, 2012
NYT: Apple developing 7.85-inch iPad to be announced this year – July 15, 2012
Bloomberg: Apple preps smaller iPad, sources say – July 5, 2012
WSJ: Apple’s ‘iPad mini’ launch nears – July 5, 2012

57 Comments

    1. Nah. Kindle Fire and the Nook have a challenge as well s Googles’ own partners. Google had to take their partners profits to get people to buy android tablets which is a pretty sad state of affairs.
      Apple will come out with a 7 inch iPad at a competitive price yet be a much more capable, better built, and better supported device.
      You can’t compare a bare bones 7″ Android tablet with minimal capability to a 10 inch iPad.

    2. Good luck with that. You just bought a device that cannot run any of the iOS apps that you have purchased or downloaded for free over the last few years. And you bought it just a few months too early – just before the real mini-iPad from Apple.

    3. So what was it that impressed you, David? Was it the missing 4G capability? The long charge times? The slower performance of the Nexus 7? The puny–and unexpandable–8GB storage capacity? Or perhaps it was the lack of a rear-facing camera?

  1. This is the first time I’ve really believed. apple will put out the small iPad – and not because of a leak, but because of the Inarguable logic of e article and Cook’s “price umbrella” statement.

    1. Sorry about typos. Should say: this is the first time I’ve really believed Apple will put out the small iPad – and not because of a leak, but because of the unarguable logic of the article and Cook’s “price umbrella” statement.

  2. Apple has been pretty successful offering premium priced computers. It can be argued that they may remain successful offering premium priced tablets. Perhaps apple doesn’t want to enter the $199 price game.

    Apples biggest concern is the cannibalization effect that a quality $199 iPad will have. Likely it would do more harm to Apple’s current iPad product offering and profits, than competitors cheap assed $199 tablet will.

    I say let the bottom feeders feed. Remain focused on providing premium products with profit margin.

    1. If Apple doesn’t cannibalize their larger iPads, Google et al. will be more than happy to. I also don’t think Apple has to hit the $200 mark to thwart the 7″ tablet onslaught (okay, there doesn’t seem to be an appreciable market for the 7″ tablet, but Apple can easily create and then dominate it). Anything south of $300 ought to do it.

      1. When Jobs was at Apple, the thought was it was better to cannibalize your own products than have someone else do it for you. I’m sure that was not Jobs simply ramming home that thought, since the classic example was something he opposed initially (iPod mini).

    2. Show an example of Apple cannibalising it’s own products by offering cheaper models. People hand down or sell on their old iPhones, they will often buy an iPod Nano, or Suffle, then move up to a Classic or Touch, or go the other way, wanting a smaller version for work or travel or sport. Same with the Pad; I have a 64Gb iPad, which I love to bits, and an iPhone 4, soon to be upgraded, but the Pad is too big for day to day carry, and I find the phone screen often too small, so a 7.85″ iPad would be perfect, small enough to throw into a bag, or a jacket pocket, and be perfect for copying photos to with an EyeFi card, for reading ebooks, and for mapping purposes.
      I honestly can’t see a downside to a smaller Pad, and I’m sure many people put off by the size or cost of the current device would flock to buy a smaller, cheaper version.

      1. And would be perfect for hospital-based medical professionals. The iPad is too big to be put into a lab coat pocket. A 7 inch tablet fits just right. 7 inches always seems to be the preferred size in life. 😉

        1. I’m not sure the “coat pocket” market is really large enough for Apple to have a reason to pursue a 7″-ish iPad mini.

          Also, in the specific example you provide, is pocket fit really going to win out over more screen real estate for reading charts or imaging results? I suspect not.

    3. i have an iPad 2 but a nexus 7 will do almost everything I do with my iPad. For my second tablet I need something just for kindle and a few other basic apps

      Why spend $500 on another iPad when I can buy something for $200

        1. my wife stole my ipad for the kid educational apps for the baby. if i’m going to get a new tablet mostly for reading, and a few other basic things it’s kindle fire or N7.

          why spend $300 more for features i won’t use? i already have an iphone 4S anyway if i want to play a crazy game

  3. Why are all of you so delusional? You are so brainwashed by the media and the hype inherent in it.

    Why is the Nexus 7 cause for concern for Apple? How many devices are actually selling? Is the product any good? Have you used it? Do you realize that every other tablet has pretty much failed except the iPad? That is, that none of them have proven to generate any sustained sales or profit. Why does a tweener make any sense? How is it any better than a smartphone?

    I own a Nexus 7, and it sucks. Tweeners are a waste of time. It’ll meet the same fate as the Kindle Fire: initial sales on hype then boom: dead after 2 months. NOBODY NEEDS THIS.

    All the rumours are just that: rumours… disinformation from Apple to confuse its competitors. APPLE WILL NOT RELEASE A MINI.

    1. You ask a bunch of questions from a perspective of someone who has not used a Nexus 7 and then follow it all up by saying you have one, and it sucks.

      lol I think you have some valid questions but I don’t believe for a moment you have a Nexus 7.

      I have used a Nexus 7 and I’ll admit I have not used one long enough to determine if the form factor is something that would really work for me. I have used it long enough to comment on how it feels and compared to any other android tablet I’ve touched this thing hits the mark. Its fluid and very responsive. Not what I was expecting honestly.

      I don’t know if its a threat to the iPad and I want them both personally. So maybe its a different class of tablet device vs a competitor. If Apple makes an iPad mini i’m sure it will sell if the 7ish inch form factor is a good one.

      It does bring up one other concern… if google were to make a Nexus 10 and it ran as smooth as the Nexus 7 would apple need to be concerned? I don’t know but they have to be thinking about it down in Cupertino.

    2. Apple will sell millions of 7″ iPads for kids of all sizes and ages.

      7″ iPads work without the sandpaper in the hands of a child on Christmas Day.

      Get a clue.

    3. I agree completely and also doubt that Apple would produce a product that fits between the IPod Touch and the iPad for the same price as the iPod Toich. $200 won’t cut it for the fabled iPad Mini which would have the same guts as the iPod Touch and then some.

  4. The thing with the compititor tablet is that what about their content and user experience, we know for a fact that the compitition is badly lacking in the eco system dept and which is why HP tablet went down the toilet and the others are not doing well. Who ever buys the cheap non apple tablets are poor people with no budget who are not worth chasing by apple, let the miserable compitition serve them

    1. The HP tablet didn’t go down the toilet on merit–shortly after its debut it was killed by the incoming CEO, before the free market could determine the victor. That CEO almost axed their PC division too, and was deemed so bad the board fired him less than a year later.

  5. Poor people do not spend money on a tablet. Poor people worry about how they will feed their family, and whether they will have a roof over their head. I’m pretty sure they are not worried about a meaningless gadget in the grand scheme of things.

    Big difference between poor and someone who doesn’t want to spend a lot on a tablet.

    1. They can be poor people, they want an ipad really bad but cannot afford it, so they buy cheaper stuff like Archos tablets and pretend they got a bargain and better value. I also see poor people who cannot afford macs buy cheaper windows,laptops and then moan that macs are expensive and not worth the value. Also, the ecosystem of apple,s compitition is not excellent, so that alone makes apple safe and not needing to down grade or react to the compitition. Good luck to the google tablets, lets see what happens

  6. OK… Wile some of the feedback on here reads like a novel,the reality is a simple one in that an Apple Google thermo nuclear war will benefit all of us. I do not give a cat’s meow about a companies profits and why would anyone ever celebrate this is beyond me as profits are crystallized by us being so foolish to pay such high prices for gadgets.

    The lay of the land will look very different in the next 12 to 18 months as economic bubbles will be busting on all continents and gadget sales will be negatively affected across the entire spectrum. I do like the fact that Google will be forcing prices to come down and margins to do the same and the real winners will be the consumer.

  7. “I do not give a cat’s meow about a companies profits and why would anyone ever celebrate this is beyond me”

    Well as someone who has started 3 companies, I will give you a simple analogy. Can you breath without oxygen, will you die without drinking water, can you drive your car without gasoline, hope you get my point.

    Profit is the oxygen, the water, the gasoline that allows me to be able to create things that you need to buy.

    Can’t make it any simpler for you.

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