Is There Room in Apple’s Lineup for an iPad Mini?

on September 12, 2012
Reading Time: 2 minutes

The iPhone 5 was the big news from Apple. But the rollout of a new iPad Touch was important in its own right. The big question it raises is whether Apple has left room in its product lineup for the much rumored iPad Mini.

With a 4″ Retina display, iOS 6, improved camera, and Siri, the Touch is more than ever a phoneless iPhone. In terms of functionality, there is plenty of room between the Touch and the existing 9.7″iPad for a smaller tablet with a 7″ or 8″ screen. The problem is pricing.

The new Touch, which will ship some time in October, is priced at $299 for a 32 gigabyte model and $399  for 64 GB. The new iPad starts at $499 for a Wi-Fi-only 16 GB model while the iPad 2 can be had for $399.

It would make little sense for Apple to introduce an iPad for less than $350. And depending on just how Apple chooses to configure this still totally hypothetical product, that price might be necessary if Apple wants to maintain its customary margins. The difficulty is that if Apple wants the Mini to be a smaller iPad without defeaturing it, the bill of materials would not be all that much lower than for the existing iPad. The display of a 7.9″ tablet is about two-thirds the area of a 9.7″. Assuming that Apple would want a Retina display with the same pixel density as its big brother, it would save some cost, but not all that much. The battery would be somewhat smaller and thus a bit cheaper. But the rest of the innards would cost just about the same.

But a $350 price tag would make the smaller iPad cost $150 more than either the Google Nexus 7 and the Amazon Kindle Fire HD, and that is potentially a very tough sell. Now Apple has lots of experience selling premium products at premium prices. But a price nearly 80% higher is an awful lot of premium. It have little doubt that the iPad would be better designed and better built than the Google or Amazon products with better software and a superior ecosystem, but Apple would have to convince consumers that it was vastly better.

Th upshot of all this is that I am a lot less certain than I was a day ago that Apple will go forward with an iPad Mini. We’ll see in a month or so.