A 7-inch iPad Presents Challenges to Apple’s Competition

by Jim Dalrymple   |   August 24th, 2012

A 7-inch iPad will put Apple in some very unfamiliar territory in the tablet market — it’s an area currently dominated by Android-based devices. However, Apple’s entry into that segment will also present some seemingly insurmountable challenges to those same companies.

iPad screen imageWhen Apple first released the iPad, it was the only player in that market, so it stands to reason that it completely dominated the tablet scene. Some companies tried to compete with Apple, but quickly realized their foothold was just too strong.

What the competition did to combat that was move to a smaller form factor, a place where Apple didn’t make a product. That made a lot of sense, and it worked. The other tablet-makers quickly gained their own foothold in the market.

With a 7-inch iPad, Apple will, for the first time, take on its competition on their turf. This will be a real test for Apple and the iPad brand, but one I’m convinced they will easily win.

This isn’t the first time Apple has taken on its competitors using this strategy. I’ve mentioned before that in the MP3 player market, Apple released an iPod and then came back later to release new iPods of varying sizes. Essentially what they did was keep squeezing its competitors out of the markets it entered.

I see the exact same thing happening to the tablet market. Apple released the iPad and dominated that market. Once its dominance was complete and its competitors had moved on, it will release a product in that segment as well.

Apple is not entering the 7-inch tablet market to take a few market share points away from the incumbents, it wants to totally control that space with the iPad.

Let’s face it, the iPad is a huge brand, so consumers recognize and identify with it. But there’s more to the story than that. Apple also has the infrastructure of iTunes and iCloud on its side.

The ability for Apple to offer its customers music, television shows, movies and educational content, synced across all devices and computers is unique and powerful.

Here’s how I see the tablet market playing out after a 7-inch iPad release:

  • Apple will continue to dominate the 10-inch market that it does now.
  • Apple will take a massive chunk of the 7-inch market
  • Amazon will continue on as it has been. Not much change
  • The rest of the market will see diminished share of the tablet market

The problem for Apple’s competitors is that there is no where else to go. If they go down much more in size, the tablet becomes a smartphone. If they go up beyond the size of the current iPad, it becomes too big to be useful.

Apple is in a position to decimate its competitors. All it needs to do is release the 7-inch iPad.

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Jim Dalrymple

Jim Dalrymple has been reporting on Apple for almost 20 years and has written for many industry publications. Jim currently runs The Loop, a technology focused blog, and plays guitar in his spare time. You can follow him on Twitter or visit his Web site.
  • http://www.talk2tony.biz/ Tony Vitale

    Jim
    Right as usual, however I would put more emphasis on Apples intention to push the gaming market. I believe it is part of Google’s strategy to pull Apple down into a low margin arena with the intent that the 7″ units will eat into the more profitable iPad market. This is why I believe the new product will be introduced and marketed to a different demographic, the existing iPod demographic. By naming the new iPad mini a New iPod Touch or better yet The New iPad Touch, Apple can create a lower tiered iPad line.
    A ” less serious line”
    Leaving the iPod line as a strictly music delivery system.
    This does two things for Apple, First it answers questions about the usability of a 7″ tablet, smaller fingers “do not need to be sand papered down” and second it brings all 7″ tablets to a “less Serious” level, not playing catch up to Google’s bait.
    If Apple markets this as a Gamers handheld that Moms will love, the profit from content sales and maybe even accessories will raise their margins, they will create a whole new market , a market they will be sure to dominate.

    tony
    @talkmactech

    • TheEternalEmperor

      I’m not sure how that plan works. I think the plan was always to enter a cheaper market. I’m not sure if cheaper was necessarily a smaller size, but that’s an implementation detail.

      It seems like a safe bet for the iPad and iPhone was to use the iPod as a model. It just turns out that the iPod model is easier for tablets.

      I think Jobs real point, sanded fingers notwithstanding was that you’ll have a hard time convincing devs to sign up to redesigning their apps just so you, the vendor, can shave off another $100 by making a smaller screen. Obviously, no one shaves their fingers to use an iPhone or iPod touch. But both of those and the iPad require optimized software.

      From what I’ve read, if true, they’ve merely made the iPad as small as possible and still use the tablet-optimized GUI elements comfortably. No sandpaper required and no bait. For Google to bait, they’ve got to have something Apple wants.

      Apple is baiting them. It is going go suck the money right out of the room, while forcing these guys to sell products at a loss.

      • http://www.talk2tony.biz/ Tony Vitale

        Hi
        Steve was referring to Apple’s research which showed that our fingers were too big to easily hit target points a 7′ tablet and that scrolling thru web pages was not a pleasant experience, my reference was that the iPod demographic (teenagers) would not suffer those inconveniences. To your point asking developers to develop for a new screen size has pretty much been solved and if not I believe that the prospect of a gaming handheld would attract the developers.
        Baiting meaning that Google who makes $0 on the Nexus 7 would hope that it might steal market share from Apple’s iPad and that Apple would have to respond by offering a product that they would cannalibize their own profitable iPad for a very lo margin tablet.
        John, your point is well taken, thats why in my comment I say that Moms would welcome it as well.

        • TheEternalEmperor

          I think that was a red herring. As I said, phones are smaller and yet many of us use them. The iPhone is 3.5″ and we manage to hit the targets. I believe that Jobs was not giving the full story. As I said, I believe that is real concern was attracting developers and not alienating them by release too many form factors, like Android. He stated as such.He said that they won’t be happy coding for a new form factor because the vendor wants to save $50. Clearly, big fingers is no problem for iPhones.

          I understand what you mean buy baiting. I just don’t agree. As I said, I believe that Apple always had the intention of going cheaper. The iPod covers the segment from $50 to $300. The strategy is the umbrella strategy and is not a reaction, IMO, to Google. None of the 7″ tablets have had any traction and Apple rarely reacts. In addition, Apple has stated via Jobs and Cook, that they would have no issues cannibalizing themselves instead of letting a competitor do it.

          • http://www.talk2tony.biz/ Tony Vitale

            For the most part I agree, I am concern that the margins on a 7″ tablet are too small and will hurt.

          • JohnDoey

            iPad Air will sell to all-new customers. It is new money, legitimate growth.

          • TheEternalEmperor

            Don’t agree. Take a look Apple is not in the business of losing money. With their scale and expertise at manufacturing, I think they will have the margins they need with this product or else they wouldn’t make it.

            They never made a netbook or sub-$500 laptop.

        • JohnDoey

          Steve said a 7 inch screen, 46% of an iPad, is too small for a full-size experience. The rumored iPad Air is 8 inches and would be almost 70% of the size of iPad. Quite different.

      • Rich

        I think Apple’s intention is to take a good portion of the 7″ tablet market for themselves, rather than letting their competition have all of it.

        • JohnDoey

          I think their intention is to compete at every price point, just like with iPod. They did not do that with Mac, but iPad is the low-end Mac. Apple is not a high-end only maker now. They were never meant to be, it was the businessman coup in 1985 that wrote off the low-end. Modern Apple from 1997–forward makes $49 music players and $999 aluminum sub notebooks and $10 office software and $5 video editors. Cheap to buy, cheap to own, high resale value.

    • JohnDoey

      These are all iPods you understand? An iPhone is iPod phone and iPad is iPod PC. Apple has the advantage of high volumes in iPod parts like nobody else. Even Google is not stupid enough to price war with Apple on iPod parts. Google is trying to find a market for their cut-rate iOS clone, but Apple’s products are too cheap to clone. iPad sells 20 million at $499 while iPad clones sell 50,000 at $499. Apple gets such a better deal on parts that iPad is cheaper than its clones. The cloning era is over. We have outsourced manufacturing. The factories can make as many real iPads as are needed. No need to saddle consumers with fake products that lack functionality and get viruses.

  • Rich

    “Apple also has the infrastructure of iTunes and iCloud on its side.”

    And controls significant parts of the supply chain.

  • Thomas Sterling

    I really hope they do come out with a 7″ iPad Touch. I am 68 and my iPad 2 is to heavy for me and my ipod touch is to small

    • http://www.talk2tony.biz/ Tony Vitale

      but will you be able to read it ok and be able to hit the much smaller target points?

      • pawhite524

        Hello,
        I gave this comment of yours a “thumbs down” because it sounds snarky and condescending but all of your other comments are thoughtful and intelligent. Please clarify if you meant to be snarky to this 68 yo commenter or if your comment was written in haste with a different line of thinking in mind. Thanks for considering this.

        • http://www.talk2tony.biz/ Tony Vitale

          Hi, thx for the chance to respond , I in no way intended to be rude , I was asking that since his age prohibited him from holding the iPad , would the small screen size prevent a problem with navigating the screen. No of fence intended

          • pawhite524

            You are a gentleman for taking the time to write me and clarify.  Pleasure to interact with you.  Best wishes…

          • pawhite524

            I responded to you personally and will now do so publicly. You are a gentleman for taking the time to clarify this. Best wishes…

          • FalKirk

            Classy response, Tony (and pawhite524 too). You didn’t let a misunderstanding get out of hand. Congratulations to you both for handling that well. Looking forward to your future contributions.

  • John

    An area that I have not seen addressed in any speculation regarding a smaller iPad, and which would be well served by such a device, even more so than the gaming market, is education. A smaller, lighter weight iPad would be perfect for those with smaller fingers.

    • http://www.talk2tony.biz/ Tony Vitale

      see response to the emperor

      • TheEternalEmperor

        The Eternal Emperor, friend. :-)

  • http://twitter.com/aidano Aidan

    A 7″ iPad would also make a *great* TV remote, that also happens to be able to Airplay.

    Just a thought ;)

  • Jack

    I have never owned any iOS device, only a couple Mac Mini’s and iPod shuffles. I have mostly used PCs over the years. If they release a smaller iPad, I will buy one and due to the integration and cross device features I would purchase an TV as well.

    It would hit that perfect spot of price, size and features I want in an iOS device or tablet. The iPod was too small for me, the iPad too large. I think such a device could draw in lots of people like me who have never had a tablet, iOS device or anything from Apple like the larger iPad and iPod.

  • FalKirk

    I was one of those who was skeptical of a 7-inch Apple tablet.

    First, despite rumors to the contrary, the 7-inch tablet has not yet proven to be a successful product. Recent court documents have proven that Samsung’s efforts have been a dismal failure. All the other Android 7-inch tablets fared even worse.

    Amazon jumped into the market during the holiday quarter and reputedly shipped (not sold) 3.5 million units. (I say “reputedly” because Amazon doesn’t announce numbers, so we really don’t know.) In the next quarter, unit shipments dropped to a puny 700,000. And remember, this was for a device that was being given away at cost. That’s not a success. That’s a disaster.

    Recently, Google jumped into the 7-inch sector with the Nexus 7. It’s reputedly selling well but, again, we really don’t know. And remember, the Nexus 7 is being sold at or near cost. Anything being sold at cost should sell well.

    And, as counter-intuitive as this may seem, in a subsidized model, sales don’t matter. When you’re giving away the razor and selling the razor blades, it’s the sale of the razor blades, not the razors, that matters. Similarly, when Google is giving away the Nexus 7 at cost, it’s the sale of content and advertising that matters – and we have zero information on those numbers.

    Second, does Apple have any need to sell a 7-inch tablet at all? For any other company this would probably be a no-brainer. Their answer would be, “Why not?” But Apple is minimalist. They do not throw products at consumers and hope they stick. They try to sell the best of the best and they try to keep their product offerings from overlapping.

    So what does the rumored 7-inch form factor have that the 9.7 inch form factor does not? Well, if the rumors are true, the proposed tablet would be:

    – 7.85 inches wide. This would make the screen 65% the size of the current iPad as opposed to the 45% that competing 7-inch tablets boast.

    – Also, 7.85 inches would allow existing Apps to scale without modification.

    – Also – and this has been the cause of a lot of misunderstanding – the tablet Apps would be able to scale down without requiring one to “sandpaper their fingers”. Anyone can scale up a phone app to work on a bigger screen and that is exactly what everyone -save Apple – has done. But getting tablet Apps to work on a 7.85 inch form factor without cramping or compromising would be huge. I can’t emphasize this enough.

    – Further, the rumored tablet will not come with a retina display. This will allow Apple to sell it for far less than the 9.7 inch tablet and, without the retina screen’s battery drain, it will allow the tablet to be…

    – Impossibly thin and light.

    Remember now, these are all just rumors. But if this proves out, then the Apple tablet would run tablet, not phone, apps, be of comparable price to the competition, be incredibly thin and light and have Apple’s design and Apple’s brand and access to Apple’s entire ecosystem too. Yeah. It would be a bloodbath.

    And what of differentiation, overlap and cannibalization? No problem. The larger screened iPad would be the iPad for those who needed to share their display screens with others (like sales people) or those who needed the additional screen real estate for more screen intensive applications. And the smaller iPad would be a personal iPad just for one.

    So would the rumored 7.85 inch iPad sell well? We may be about to find out. But we may already know.

    • TheEternalEmperor

      Exactly. I believe that the number one item is the scale down. All apps will run with very little to know modifications. A ready made ecosystem ready to go without alienating the devs with too many form factors.

      Without apps and ecosystem, you have a fancy paper weight.

      • FalKirk

        “Without apps and ecosystem, you have a fancy paper weight.” – TheEternalEmperor

        You mean like the webOS Touchpad and the QNX Playbook and every Android tablet know to man and Windows RT? Those paper weights?

    • Canucker

      You forgot the blindingly successful PlayBook!! I think Samsung’s sales numbers are a little dodgy though. They were trying to minimize any penalty in the trial and were also only referring to US sales (where Apple totally dominates). In other markets including europe and asia, the other tablets are faring better (but not much).

      The biggest point is the price. Apple will likely price this at under $300 and will not produce a 64 Gb version. They’ll make money and leverage all of the development from iOS on their other devices.

      Samsung is starting to fell the pinch of the limitations of depending on an OS that it can only superficially modify. The Galaxy Note 10.1 has been widely panned – in particular for its shoddy construction but also its kludges in software to allow split windows and other desirable features. instead, they are left pitching the same functionalities as their competitors.

      • unhinged

        I am of the opinion that Apple will price the smaller iPad at $199 – and still make a profit. I could be wrong, and they could go to a higher price point, such as $249, to maintain their “premium product” mythos but at $199 they would absolutely destroy the chances of any competitor in that space.

        Mind you, there is also the chance that they will release at $249 and keep that as the “new version” price, then sell the “old version” at $199 after the new one comes out.

        The only reason to make the prices higher is to avoid cannibalising sales of the iPhone. Currently (IIRC from asymco) consumers can buy the iPhone 3GS for “$0″, the iPhone 4 for “$99″ and the 4S for “$199″ (prices in quotes because of the carrier contract attached). They can buy an iPad 2 for $399, an iPad 3 for $499. So the missing price point in the scale is $299 – but remember Steve’s warning of going for profit rather than market share at the critical juncture.

        Exciting times ahead.

    • lucascott

      Some folks will tell you that if Jim says it, then it’s fact. But on this one I can’t totally agree.

      Steve spoke out about a smaller iPad. Nothing was said about a larger iPod touch. That UI was designed for a smaller screen after all. And we haven’t seen ny rumors bout the Touch so who knows.

      Remember folks that all iPads are tablets, but not all tablets are iPads.

    • Rich

      FalKirk, I have a feeling Jeff Bezos has a different take on the Kindle Fire than you do. Remember that the Fire is a Sears catalog for the 21st century, i.e. a way for people to order stuff from Amazon’s online store, which has an endless – really endless – list of items ready to buy with a couple of taps of your finger no matter where you are.

      Now, let’s assume Amazon is losing $20 on each Kindle Fire, which is conservative considering you said each Fire is priced at Amazon’s cost. All it takes is one $20 order from Amazon and they’re healed, and for years after that it’s pure profit – and Amazon sells *enormous* amounts of stuff every year. The Fire sounds to me like another clever move by a frighteningly clever merchandiser.
      And if sales of the Fire have trailed off since it was introduced, I’m thinking Amazon will soon offer an improved model that people will like better…no doubt in time for this year’s holiday season.

      • FalKirk

        “I have a feeling Jeff Bezos has a different take on the Kindle Fire than you do…”-Rich

        No, I understand the model. However, Bezos can’t be happy that his give-away-at-cost tablet is not selling well.

        And his model baffles me. The idea is supposed to be that you give away the tablet and make it up in the sale of content. But Amazon has 4% profit margins. How are they going to make back the cost of tablet when they’re selling content and other services for such small margins?

        • Rich

          I’ve read about Jeff Bezos and watched an interview with him, and I believe he is one of the smartest retailers to ever open a storefront – even smarter than Sam Walton, and that’s saying a whole lot. Since Bezos started Amazon he’s taken two approaches to selling: (1) he intentionally operates with very small margins, (2) he has no problem waiting years to start making money on new projects. What’s been the result? Amazon just keeps growing and growing, taking over more and more categories of merchandise until they now sell almost anything you can think of. They even sell services, like Amazon Web Services and the new Glacier storage that lets you store files for less than than 1 cent per gigabyte per month. They have a division that lets writers publish their works free from the restrictions of traditional book publishers. They set up a film division that will purchase your concept or script for a new movie. They have limitless ambitions and they are so supremely clever it’s honestly scary to me, and I’m not even in retail.

          You can be confident that Bezos has done the math on the Kindle Fire, and if it isn’t profitable yet, it will be. He can wait because he knows the outcome, and it will be in Amazon’s favor.

          • FalKirk

            “You can be confident that Bezos has done the math on the Kindle Fire”-Rich

            I admire Jeff Bezos as much as anyone does. I think he is a brilliant entrepreneur. But unless he knows something that I don’t (quite possible), I don’t like his tablet strategy.

            I think Amazon’s strategy should be to be on every tablet (which they are). There is simply no need for them to create a tablet of their own. I’ll wait for Jeff Bezos to prove me wrong. He’s just the man to do it.

        • TheEternalEmperor

          Agreed. Your plan is to create a product that appeals to the cheapest, poorest customers with the intent if enticing them to spend enough money later to make up the difference?

          You’re going after the cheapest people, right? It didn’t help that the product is woeful. I know one person, through a friend, who purchased one. She never talks about it. That’s a bad sign.

      • JohnDoey

        It takes one $1000 order for Amazon to make $20 because their margins are only a few percent.

        Amazon is a pyramid scheme for investors.

        • Sharon_Sharalike

          Not even a few percent. About 1%. You’re spot on about the pyramid scheme. At 1% profit, with a $110B valuation they’d have to sell 11 trillion dollars worth of stuff to earn that much. Considering that current annual sales are about 0.05% of that, I don’t think they’ll make it.

    • Jeremy Taco Patterson

      Great reply. I can tell by the general thoughtfulness and credibility of the comments that I am going to like it here.

      • benbajarin

        Glad you found us! Looking forward to having you engaged.

      • sgns

        I share this sentiment. This is very nice.

    • JohnDoey

      I told my friend who uses a MacBook Air and has no iPad that there might be an “iPad Air” and she said “when can I buy?”

      Users are splitting between Pro and Air camps. To some of us, iPad 3 is small, but to others, it is large. The latter group want iPad Air for its lightness, not cheapness.

      And there will be iPad 3 users who buy iPad Air as an accessory screen, to do a true multitasking here you have both apps in front simultaneously.

      Lots of uses for iPad Air.

    • http://www.facebook.com/people/Vera-Comment/100002347335999 Vera Comment

      i’ve had all the iphones and all the ipads. I got a nexus 7 because i wanted to mess with pure android (not some OEMs version) and I know (from 3 days with a kindle fire) that i also wanted a 7″ ish device. the damn ipad is too heavy for reading/one handed tasks for long durations. the nexus is MUCH lighter. and i guess because of the smaller screen, less straining on my eyes… lowest brightness, white text on black background, 7″ form factor… fine for reading at night, in bed, in the dark.

      the fact that I can get my comics is really nice (key advantage over my kindle 3).

      i was going to pounce on a new kindle (assuming they’re shipping one w/ backlight) in the next rev… but sorry Bezos, you failed me with the Fire… and there’s no reason for me to get a hardware kindle (minus the hardware only Prime perks).

      you’re right. apple will kill it with hardware. while the nexus actually EXCEEDED my expectations in all reagards (hardware, software, build quaity/fit n finish).. it’s still not an ipad retina.

      if apple ships a 7″ something, there’s a good chance that will be my day to day carry device plus iphone 6th gen, and the ipad becomes more of a permanent fixture on the couch/desk…. where my laptop used to be..

      the nexus will retire to the bedroom.. charger in tow. (goog really needs to fix the app situation, having a hard time spending the $25 buck store credit..!

      • Neil (not THAT Neil)

        Vera’s has an interesting point.
        My son’s iPad 3 is noticeably heavier than my 2.
        There *could* be a market for a smaller iPad, but I for one think it will be too small a market for Apple to bother with.
        They already have the ‘tablet’ space sewn up.
        It’s an interesting discussion though, and refreshingly short on Apple haters today!

  • http://www.facebook.com/profile.php?id=711858292 Paul Rubin

    The reason the 7″ market hasn’t taken off is because EVERYONE has expected Apple to release a smaller iPad for this holiday season. Just because existing 7″ tablets haven’t sold like gangbusters doesn’t mean there’s no market. There’s simply a whole bunch of potential customers waiting to see what Apple does until they can’t wait anymore. If Apple waits this season out, they’ll have waited too long.

    • FalKirk

      “The reason the 7″ market hasn’t taken off is because … a whole bunch of potential customers waiting to see what Apple does…”

      The vast, vast majority of potential 7″tablet owners don’t watch the market the way we do. The 7″ tablet is not failing because people are waiting. It’s failing because it has no Apps, little content and a poorly executed ecosystem.

    • JohnDoey

      When the tech is crap, there is no need to look for other reasons. Google said they just realized that iPods ($200 media players) require a content ecosystem. Apple realized that in 1999 and that is why they have one now and Google doesn’t.

      “Tablets” are not all the same like bananas are all the same. iPad literally does hundreds of thousands of things that no other tablet can do. People feel stupid when they buy a copy of an iPad and they can’t do things that they have seen kids do with iPads.

  • matthewmaurice

    I think you mean “annihilate it’s competitors”, not decimate. A 7.85″ iPad at $250-275 would take whatever air is left in the Tablet market for non-iOS devices. Basically all the other manufacturers would have to fight for the “anything but Apple” crowd, Amazon Prime junkies, and the lowest-end bargain hunters, three market segments that were never going to buy an iPad anyway.

    • JohnDoey

      iPad is still the best Kindle and the most popular Kindle. Amazon customers are iPad buyers.

  • http://twitter.com/FlopTech FlopTech Engineering

    Re: “When Apple first released the iPad, it was the only player in that market…”

    Depends on how you define “player.” Microsoft had all manner of UMPCs, slates, and whatnot. None of which were any good. So yes, maybe Microsoft was more of a “placeholder” than a “player.”

    Re: “What the competition did to combat that was move to a smaller form factor…”

    Partly because Apple didn’t have a smaller pad. But mostly to reduce their costs. The original iPad’s $499 base price shocked the industry. Amazon barely breaks even selling the Kindle Fire for $199. We think Apple would sell just as many “iPad minis” at $250 as they would at $200. We think it’s price insensitive within that range. So we expect it to go for $250.

    • FalKirk

      Good observations.

    • JohnDoey

      Microsoft’s tablet devices were all much more expensive — over $1000. That is a different market, same as $500 and $1000 notebooks are a different market. Apple created the $500 tablet market and is eating the $500 PC market alive.

    • TheEternalEmperor

      My guess: $229. Keep it tight with the $199, but still a bit “exclusive” and profitable. There is no air beneath that price.

      • Sharon_Sharalike

        Considering that a 32GB iPod Touch goes for $299, I can’t see them pricing this at $229. Maybe starting at $249. I don’t think they’d need to start lower than that.

        • TheEternalEmperor

          Maybe. That’s the beauty of speculation. I think that you could also argue that it should be *more* than the touch.

          We’ll all soon find out! :-)

  • stuart lynne

    Apple will release the iPad with a number of different SKU’s… 16/32 memory, with/without LTE. This will allow it to match a broader range of customer requirements.

    LTE may be more popular with the iPad Mini than the full sized iPad. This seems counter to the idea of the mini being the lower cost iPad. But it is also smaller and may end up being the iPad of choice for people going out of their office. I have the full sized iPad (without LTE) and its not really that much smaller than my laptop.

    When I buy the mini iPad I’ll get LTE because it will be much easier to take with me and much more useful to me with a permanent network connection.

    The take home is that the iPad mini will have competitive entry level pricing available (16GB, no LTE) to compete against the current crop of 7″ pads. But it will also have high end SKU’s (34GB, LTE) that make it much more functional.

    • pawhite524

      And to state another point of view to support your point is that LTE is ***hugely*** profitable. Allegedly it costs anywhere from $18 to $30 and adds $130 to the selling price.

    • JohnDoey

      The full-sized iPad is half the size and weight of the smallest MacBook Air and has double the battery life. iPad is quite a bit smaller than your laptop.

  • bartzumbari

    I don’t think the iPad mini is a response to the 7″ tablet from Google–I think Apple has been planning an 8″ tablet for a long time and this fall just happens to be when they will have it ready. I believe Google got wind of Apple’s plans and rushed a 7″ tablet to market to try to scoop Apple (this is why we read about Asus describing the Google tablet project as an insane rush job.) Of course it appears the Google tablet may have been too late for a meaningful “scoop”.

  • pawhite524

    Given we are all subjects of rumors and best guesses whether educated guesses or not, I am reading in this thread some “old” rumor thinking as to the cost and/or selling at a loss of the Kindle Fire and Nexus 7. The latest tear-down estimates of parts is the Fire is in the $130 to $140 range and the 8 gig Nexus 7 low $150′s but the 16 gig Nexus 7 is at $160. These are the latest iSupply and IFIXIT estimates.

    Now we are talking parts alone so one must add costs for assembly, distribution, packaging, marketing, and what are know as General and Administrative costs. The total for these is typically no more than 30% meaning the final cost of the Fire still allows the Fire approximately 10% profit and the 8 gig Nexus 7 as low as a $5 to $10 profit but the 16 gig Nexus 7 has a guesstimated profit of $42 which is approximately 15%. This makes it profitable for Google on its own and in the case of selling advertising the potential profit rises.

    So, to get back to my reason for writing today:
    The concept these 7″ tablets are sold for a loss is likely not true. Given the other “portals of profits” for Amazon and Google these two commercial giants will take low profits on the hardware knowing the “backend” is where it is at- the give away the razor to sell razor blades concept.

    Lastly, forgive me if I sound like a pompous douche trying “to get the world to think right just like I do.” That is not my intention. The idea these companies would sell for a loss was so illogical to me I waited to get other data to see if it was true and now there is some decent evidence it differently than from initial reports.

    All the best to you and yours…

    • JohnDoey

      The vast majority of Kindle Fire units sold in the first quarter when the bill of materials exceeded the retail price.

      It is hard to make a profit on hardware. They are not likely accidentally finding some air there.

      • pawhite524

        You state, “The vast majority of Kindle Fire units sold in the first quarter when the bill of materials exceeded the retail price.”, so factually I don’t know what to say.
        I wrote only of what is published by what we outsiders, i.e., not in the accounting departments at Amazon or Google, can read by what are considered reliable sources. In the present, these were their figures.
        If you are right then I tip my hat to you.

    • Neil (not THAT Neil)

      Perhaps they’re not sold at a total loss, but it is well known that the 7 and Fire are not wildly profitable! I think the point is that this is in stark contrast to the iPad, which is also a nice portal to a lovely content ecosystem but highly profitable as well.
      Apple then can be considered the only true player in this market for this reason alone. Android/Kindle/Nexus are just riding Apple’s innovation wave, but it’s Apple’s lake we’re in.
      In my mind the only way for competitors to, er, complete is to add ‘features’ (that don’t work very well or that few owners will ever use) so consumers will be impressed with all the check marks on the box (“look honey, it has the turbo thrux capillary vortex system”) or make it as cheaply as possible (as Dell, etc. do so well) or sell it at too high a price.
      Apple’s iPad really is a game changer, and while I for one do not think we’ll see a smaller version it is entirely possible that Apple is at least considering it.

      • pawhite524

        Thanks for the response. You make solid points and won’t get any disagreement from. I like the way you write…

  • JohnDoey

    But it will be an 8-inch iPad.

    I think it is price that matters. With PC’s, they are split into $500 systems and $1000 systems. With tablets we are seeing $249 and $500 representing a low and high-end. Right now at $249 you get a 7-inch Google tablet with 16 GB and Wi-Fi only. Apple can do better than that at $249.

  • B. Lloyd

    “This will be a real test for Apple and the iPad brand, but one I’m convinced they will easily win.” if they do it will not be due to their products, but to sold out reviewers like you, jim, ‘earning’ their freebie ipad- and iphone-kickback-booty.

    ipads are not that special. the screen is dismal compared to the competition (conveniently sidestepped by means of bullshit u.s. courts) and very little of the operating system has ever been unique.

    apple products fail more often than the competition, and the support system for repair is imbecilic.

    none of that matters, i guess. at least as long as reviewers and reporters get their geegaw of the month, courtesy of apple, inc.