Why Competitors Should Fear the iPad Mini

by Ben Bajarin   |   November 21st, 2012

We have been conducting tiers of research trying to gauge consumer sentiment around tablets and in particular of late, the iPad Mini. Part of my interest with this research is designed to get deeper insight into the 7″ form factor in terms of perceived value and core uses cases for consumers versus the larger tablet form factors.

Bear in mind, when we do research it is rooted in ethnography and observational methods not surveys. We interview consumers and strive to understand things from their perspective. I like to explain it by saying we strive let consumers perspectives help shape our own rather than the other way around. That’s how Creative Strategies has done it for over 30 years and its never let us down.

Another thing worth mentioning for those not familiar with our work is that we target consumers in our interviews on specific parts of the adoption curve. Most of our focus is on the mass market consumer and late adopters not the tech elite and early adopters.

Our research on this matter will get packaged in a more formal way in the future but I wanted to share a few highlights.

Shifting Mindset

One thing I found interesting was that nearly everyone we spoke to who expressed interest in the iPad Mini, simply assumed the next version would include a Retina display. More interestingly this did not seem to be a deterrent to their intended purchase this holiday season. When I dug into why there was no interest to wait, the overwhelming consensus was that over time their intention was not just to own one but to own many. Ideally one for every person in the house. So the logic goes, when the new one comes out the older gets handed down. This used to be the logic for notebooks.

Price was certainly a driving factor for the interest of the iPad Mini over the iPad. But to many the price premium did not seem to be a deterrent. One of my key takeaways is that the perception with the iPad and the iPad Mini, relative to tablets, is that even though you pay more, you get more. This in terms of hardware and software quality as well as ecosystem and perhaps more importantly the experience.

The vast majority we interviewed had not owned a tablet yet and were on all parts of the economic scale. Those in the lower income brackets were also intending to research a few other tablets in the 7″ form factor. The leading three were the Nexus 7, Kindle Fire HD and Nook HD. Even with that bit of feedback over 60% said they were still leaning toward the Mini.

When we discussed the intended use cases for the iPad Mini, every single person with kids mentioned it as a part of their child’s educational process as a key use case. This did not surprise me. What did surprise me was that over half of those who brought up using it as a part of their kids educational process made the point that they believed the iPad would be used in schools in the future and making sure their kids were proficient with it was important and that they wanted their kids to use the same technology at home they will be using in schools.

This bit of feedback is very interesting. Here again we have a thought process that was used for notebooks and PC literacy skills being used for tablets. I truly believe we are moving into a touch literate world.

Some concluding thoughts. I firmly believe, now more than ever, that the tablet is taking the place in the hearts of many consumers as the new personal computer. This again cements in my mind the fact that this market will be much larger than the notebook and desktop market ever was and I believe even closer in size to the smartphone market than people realize.

Our research is continually bringing to light that consumers are thinking about tablets the way they used to think about notebooks. Validating again our conviction of a PC Cliff.

Continually we hear that although price is a consideration they don’t simply want cheap. Consumers are smart and they will pay for value. I believe way to many believe that price is the ultimate decision factor and our research continually validates that is not true. If the mindset around tablets continues to have emotional and personal appeal then there will always be a market for more premium experiences.

What I would be worried about if I am an Apple competitor is that the iPad, and perhaps specifically the iPad Mini, becomes the tablet that large portions of the market cut their teeth on thus becoming the standard. The iPad family, in my opinion, is the only no compromise general purpose tablet on the market. The bottom line is price not as big of a deal as we believe and consumers will pit the iPad against the competition (all which I have had extensive time with). That comparison, with the reality that price is not the ultimate driver, is what competitors should be most concerned about.

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Ben Bajarin

Ben Bajarin is a Principal Analyst at Creative Strategies, Inc - An industry analysis, market intelligence and research firm located in Silicon Valley. His primary focus is consumer technology and market trend research. He is a husband, father, gadget enthusiast, trend spotter, early adopter and hobby farmer. Full Bio
  • http://freeaudionetwork.wordpress.com/ secular1

    scoop.it/t/ipad-tablet Until a competitor is able to bring full laptop computing to the Tablet the iPad will dominate. I thought the Surface might be the one yet it seems if the Surface Pro fails the Surface Tablet will go down like the Zune.

    • rattyuk

      Not entirely convinced that is a solution. A full laptop experience on a tablet is a laptop with a removable keyboard. Microsoft have offered that solution for about 10 years or so now and it didn’t take off. What makes you think that this will be any different?

      • steve_wildstrom

        I am by no means convinced that the Windows 8/RT strategy will work, but both the hardware and software is vastly better than the Tablet PC introduced in 2003. The problem with the Tablet PC is that Microsoft never built a touch operating system for it, so it never got any traction outside of a few verticals, such as insurance and health care. And both the slate and convertible Tablet PCs were heavy, expensive, and had lousy battery life. The new generation is much. much better.

        • mjtomlin

          Microsoft’s biggest problem, is they still don’t have a touch operating system for tablets. All they’ve built is a layer on top of what was already there. In the long run, how is this any better? It’s just going to add confusion to users.

          Could you imagine how people would react if Apple decided to make Dashboard (which is an HTML5 based layer much as Metro is) a “new” app layer?

          The Surface is Microsoft as they’ve always been … a jack of all trades, but a master of none.

          • melci

            Indeed, to use Office on the Surface RT, you have to drop out of the interface previously known as Metro and use the non-touch Desktop mode. How ridiculous is that?

      • http://freeaudionetwork.wordpress.com/ secular1

        Samsung could pull it off most likely. Microsoft has offered a solution for about ten years now? You got to be kidding. I’m talking about someone offering a real workable tablet that runs a full laptop OS. MS hasn’t done it well yet!

      • http://freeaudionetwork.wordpress.com/ secular1

        The tablet failed and then failed and failed again. So what made Apple try again? Technological advancement. The Wright Brothers followed thousands of inventors who failed to make a flying machine. So why did they try again? Vision, Inspiration and the will to engage in progress. Which is why there’d be no airplanes today if the innovators followed the popular thinking of their time.

    • FalKirk

      “Until a competitor is able to bring full laptop computing to the Tablet the iPad will dominate.” – secular1

      No one is ever going to bring full laptop computing to the tablet because they are two very different things.

      • Armando

        No one is ever going to bring full laptop computing to the tablet because they are two very different things. – FalKirk

        For the time being, yes. But with that said, Apple will be the first to do so. It may take five years, but it will happen.

      • mhikl

        I think you are correct, Kirk. No matter how I try, I can not teach my dog to purr.

        • http://freeaudionetwork.wordpress.com/ secular1

          There’s a video on youtube showing a cat thinking no human is around, barking. So maybe your dog has its secrets as well.

          Cat barks like a dog, until it gets found out

          http://www.youtube.com/watch?v=Z8ZU04U-xAo

      • http://freeaudionetwork.wordpress.com/ secular1

        I see. You think because you haven’t figured it out no one will? Goodness knows innovative inventions haven’t had to rely on your lack of vision.

        • SXT

          The iPad will not replace the laptop for a long time, if ever, because of the huge performance difference between the two platforms, and because the tablet form factor imposes restrictions that make it impossible to have laptop-esque performance. As a test case, I’ll use my computer and tablet (retina MacBook Pro 15″ and iPad 3, respectively): The rMBP has incredible performance in an amazing form factor. The performance comes from a combination of the components used and the engineering and design that supports them: quad-core i7, flash architecture, lots of fast RAM, etc. provide the performance, but also produce a lot of heat and require a huge amount of battery; the thinness of the computer was only possible because Apple solved those problems with very well designed and efficient cooling, and by filling all the space that was not already taken up by circuitry with massive batteries.

          The iPad 3 couldn’t be similarly optimized. Because of the form factor, you could not put a fan or similar sort of cooling device into the iPad, so putting in a processor with higher clock speed is out (it would also require a larger battery, which again isn’t possible because the battery size has already been maxed out. And the iPad already uses flash architecture, so storage is already as fast as current technology allows). And also, for many tasks, the man-to-machine interface is superior with the laptop (faster typing, you have a mouse in addition to all the multi-touch gestures that you get with the iPad, the screen is bigger, better speakers, etc). And don’t think that in the future some amazing new technology will change this disparity. I mean I’m sure in a decade or two I’ll be able to buy an iPad with performance similar to or better than that of my rMBP, but all the technologies that allow this to happen (improvements to thermal dissipation, battery size and capacity, etc.) will also be available to laptop designers. In other words, any innovation that improves tablet performance will also improve laptop performance, so the tablet as a form factor will never be able to match the performance of the laptop.

          Don’t get me wrong, I love my iPad and use it a lot, and its by far the best tablet one can buy. Its just not a viable replacement for my laptop.

          • W. van Dam

            SXT, I think you’re missing the point. The statement that tablets will never offer “full laptop computing” is not about computing power. It is about the interface and user experience.

            “… so the tablet as a form factor will never be able to match the performance of the laptop.”
            At every point in time desktop computers have offered better performance at a lower price point. So why is it that you have a macbook?

          • http://freeaudionetwork.wordpress.com/ secular1

            I have a 2012 Macbook Air and a 2011 iPad. I agree SXT, there’s no comparison of performance. It does seem to me, imho, that if Apple gave the Macbook Air a touchscreen and a screen that could be positioned for touchscreen input, the Macbook Air would be absolutely the cat’s pajamas (Cat’s Pajamas defined http://answers.yahoo.com/question/index?qid=20070418091251AAyulbS)

  • http://www.facebook.com/people/Jeff-Laing/100000029389036 Jeff Laing

    Apples biggest strength is also a bit of a (business) weakness. My iPad 1 is still going strong and will be a candidate to hand down – Apple products in general seems to have a longer lifespan which facilitates the hand-me-down approach but also impacts on the “time to upgrade” decision. I didn’t buy a 2 or a 3 because the 1 was working fine.

    I don’t expect my Kindle to survive as long. (Yes, I own one)
    I don’t expect my Nexus 7 to survive as long (yes), though it will outlast the Kindle.

    In a household with 5 Mac Minis and 3 iPads, and 7 iPods, the one thing I know is that these things do pay you back in time. Buying cheap, however, has never been sensible in the long term.

  • W. van Dam

    These are some nice insights. Thanks!

    “If the mindset around tablets continues to have emotional and personal appeal then there will always be a market for more premium experiences.”

    I think there may also be something else going on. As you’ve said, tablets are increasingly competitors to notebooks. I may be wrong, but as far as I can tell tablets are categorically cheaper than notebooks bought by mainstream consumers. When all options appear relatively cheap compared to what you’re used to paying there is no price barrier and your attention shifts away from price to quality.

    • benbajarin

      Tablets, at least the iPad and now a few others are actually priced exactly like what we would consider mainstream notebook prices. $499-$799. This is not a trivial point or observation. This particular price structure is where all the OEMs make the most of their money. They make little money on the low end, and don’t do enough volume on the high end to truly be impactful. It is this mainstream price point that we feel shifts from notebooks to tablets in terms of consumer interest and price constant.

      Which means that the traditional notebook OEMs are losing the core of their business to tablets. Hence, they need to respond and time will tell if Win 8 is the answer or the problem.

      If how I feel this plays out happens, then the middle of the notebook pricing goes away and all we are left with is low end and high end. If the others can come up with a compelling tablet solution for the mainstream price points, some folks are going to be in a lot of trouble.

  • Todd Papke

    I’ve been watching computers and their impact on people and culture for over 30 years now. The computer has evolved from the standpoint of “What can I do with this thing?” to “What do you want to do?”- with a market of hardware and software offerings increasingly allowing the second question to be asked. Keep in mind that for the longest time most of the people buying computers were after one simple tool; a word processor. Spreadsheets may have allowed newcomers a moment of glory in the marketplace (think IBM and Lotus 1-2-3), but ultimately word processing was the pivotal need that started changed the question format for what these things could do. Today we have information feeds, services we transparently use with one foot in the cloud and one foot on the device. We’re also seeing a new category of user – one who has grown up with more advanced HCIs than the keyboard and mouse, and is capable of acclimating to new gesture vocabularies that manipulate ever increasingly abstract items on devices that transparently morph themselves to the task at hand. The touch tablet ushers in ubiquitous computing to the masses, and it does so with a supportive IT infrastructure that would have been the stuff of science fiction novels only 10 short years ago. Apple’s ability to seamlessly integrate all the media distribution channels into their iPad has given them a huge lead in a fertile marketplace- one that won’t be easily overcome for all challengers for some time. People are much more sophisticated when they ask what these things can do than they were during the PC era, and they have an innate sense of the impact of their decisions. They’re buying these tools for themselves. Not for their companies or their children, but themselves. At this price point it’s easy to hand these things down and around because the utility continues to go up while the cognitive depreciation goes down. You still see first generation iPads being utilized side-by-side with the newer versions- something that is rarely seen with PCs because of this.

  • Colin Webster

    A word of caution – The iPad, like any device with a touchscreen operation, requires tin oxide and indium to make it work. It’s estimated there are 40 years’ supply (at current production rates) remaining of tin and about 10 years of indium. The price of these materials (and other key materials) has been extremely volatile for the last decade. The devices cannot be recycled and they will not be useful in their present form for too many years. So…how will our learners be using them long into the future?

    • steve_wildstrom

      I think you are making the classic error of assuming that both technology and resources are static. On the resource side, supplies have a magical way of appearing as prices rise and previously uneconomic sources become viable (consider oil and gas.) On the technology side, as a resource becomes scarce or more expensive, we find ways to use substitutes. That’s why a resource economist will tell you that it is pretty much impossible to ever run out of a critical resource (within reason.)

  • synthmeister

    Agreed. As another article mentioned, supposedly the iPad mini had so many awful shortcomings, yet it still broke out of the gate with blockbuster sales.

    Think of all the features–many of them associated with Apple’s own products–that the mini was (supposedly) missing:

    1. Too expensive
    2. Too low-rez
    3. Too underpowered
    4. Too late to the 7 inch tablet market
    5. Too limited (no SD, USB, HDMI or even the traditional iPod connector)
    6. Too Disconnected (no 4G for the first few weeks)
    7. Too soon after the iPhone 5 and iPad 3/4 and iPod touch
    8. Too many Apple fanbois already have iPads, right?

  • Jeff

    I suspect that with the built in phone, the mini could become a replacement for the phone. If it will fit in a sport coat pocket, with a Bluetooth earpiece, why carry a phone?

  • tw

    If galaxy tablet ten and s2 are copying apple, can we say that ipad mini copied nexus 7 ?

  • David

    “Part of my interest with this research is designed to get deeper insight into the 7″ form factor in terms of perceived value and core uses cases for consumers versus the larger tablet form factors.” Why is that sentence better than the following? “I’m interested in part because I want to know what customers like about 7″ tablets and when they tend to use 7″ tablets instead of larger tablets.”

    Writers need to understand what their sentences literally say. Research may be designed to accomplish something, but neither an interested party’s interest nor any “part of his interest” can be “designed” to do anything.