If Apple comes up with a smaller iPad later this year, it will be a killer product
Or another killer product? Or, on the pessimistic side, a loser defensive move showing Apple's fear of competitors such as Amazon, with its Kindle Fire, and Google's 7in Nexus tablet?
Recent leaks from purported sources inside Apple's traditional suppliers have ignited a new frenzy of speculation. And not just from the usual blogging suspects – often better informed and more insightful than the official kommentariat. BusinessWeek and the Wall Street Journal both stuck their august necks out: the so-called iPad Mini will be launched this coming September.
On this matter, my own biases are on the record.
In an August 2009 Note titled Apple's Jesus Tablet: What For?, I went as far as measuring the pocket on men's jackets. As a result, I posited a 10in (diagonal) tablet might not provide the same desirable ubiquity as a 7in one that men could carry in a coat or jacket pocket, and women in a purse.
(Apple once came to a similar conclusion: the original Newton project started by Steve Sakoman in 1987 was a letter-size tablet. After he and I left, the screen size was cut in half and the actual Newton came out as a pocketable product.)
Five months later, on 27 January 2010, Steve Jobs stood up and changed the personal computing world for the third time with the 9.7in (diagonal screen size) iPad. The take-no-prisoners price ($499 for the entry model) was a big surprise. Another one, much less obvious, was Dear Leader's unusually tentative positioning statement:"'We'll see how the iPad finds its place between the iPhone and a MacBook." (I'm paraphrasing a bit but the tone was there.)
The iPad surprised many, Apple included, and at the beginning was often misunderstood. I recall my initial disappointment at not being able to perform the same tasks as on my laptop. A huge number of normal humans of all ages thought differently. As we know now, the iPad grew even faster than the iPhone. Notwithstanding Microsoft's clinging to its ossified PC-centric rhetoric, this turned out to be the true beginning of the post-PC era.
This excited competitors around the world: you'll find here a list of 76 tablets announced at CES. By the end of 2011, few had accomplished anything. One exception was Amazon's Kindle Fire; its Christmas season were rumoured to reach more than 4m units, even 6m by some rumored estimates. This rekindled, sorry, rumors of a smaller iPad.
In October 2010, Jobs famously dismissed the idea: "7in tablets should come with sandpaper so users can file down their fingers." None of the journalists present at the time had the presence of mind to ask him about the iPhone screen…
Tim Cook, Steve's disciple put it well at the D10 conference last June when he affectionately (and accurately) called Jobs a great flip-flopper, citing examples of products features his then boss ended up endorsing after repeatedly nixing them.
In an April 2012 Monday Note, I discussed the possible end of Apple's One Size Fits All for iPhones and, in particular, iPads. There, I linked to an A T Faust III post lucidly explaining how the original 1024 x 768 resolution could easily scale down to a 7.85in tablet and achieve a nice 163 ppi (pixels per inch) resolution, the same as pre-Retina iPhones. This leads one to believe there is abundant (and inexpensive) manufacturing capacity for such pre-Retina displays.
A few questions.
First, developers. As we saw with iOS apps for iPhone and iPad, size matters, apps don't scale. That hasn't dampened the enthusiasm of developers for investing in app versions that take advantage of each device unique characteristics, as opposed to committing the cardinal sin of "it's like the other one, only smaller/bigger''.
So, if developers believe a 7in iPad would sell in large numbers, they'll happily fire up Xcode, adapt their existing app, or write a new one. As for the belief in large unit volume for a 7in device, the initial reception accorded to Google's Nexus tablet shows there is potentially a lot of life in a smaller iPad.
(I ordered a Nexus tablet and will dutifully report. Last April, I bought a Samsung Note phablet and promised a report. Here it is: I'll sell you mine for $50. A respectable product, I could definitely live with it. But, IMO, too big for a phone, too small for a tablet.)
Second, Apple was on the offensive. Now, competition succeeded in putting it on the defensive. While initial Kindle Fire sales were rumored to be huge, the same "sources", checking on display supplier suppliers, now claim sales of Amazon's tablet dropped precipitously after the holidays. Amazon keeps mum, but is also rumored to prepare a slew of not one but several tablets for this year's Xmas quarter.
As for the Nexus tablet, it isn't shipping yet.
Instead of a defensive move, I think a 7in iPad might be another take-no-prisoners move:
From the very beginning of the iPad and its surprising low $499 entry price, it's been clear that Apple wants to conquer the tablet market and maintain an iPod-like share for the iPad. Now that Apple has become The Man, the company might have to adopt the Not A Single Crack In The Wall strategy used by the previous occupant of the hightech throne.
If this cannibalises 10in iPad sales, no problem, better do it yourself than let Google, Amazon or Samsung do it.
Lastly, the price/cost question. As you'll see on this video, Todd Schoenberger, a Wall Street haruspex visibly off his meds, contends an iPad Mini is a terrible move for Apple, it would be a break with its single product version focus. Like, for the example, the one and only Macintosh, the one and only iPod. Also, he continues, an iPad Mini wouldn't allow Apple achieve the 37% gross margin it gets from the bigger sibling.
No. If we're to believe iSuppli, a saner authority on cost matters, the latest 32GB 4G iPad carries a Bill Of Materials of about $364, for a retail price of $729. Even with a bit of manufacturing overhead, we're far from 37% today.
And, tomorrow, a smaller iPad, with a smaller display, a smaller battery, a correspondingly smaller processor would nicely scale down in cost from the "new" iPad and its expensive display/battery/processor combo.
To where? I won't speculate, but Apple has shown an ability to be very cost competitive when using previous generation parts and processes. See today's iPhone 3GS and iPhone 4 prices for an example.
I have no inside knowledge and quite a few inclinations: I'd love a pocketable iPad as much as I like small computers such as the defunct Toshiba Libretto and the lively 11in MacBook Air.
If Apple comes up with a smaller iPad later this year, I think it'll be a killer product.
JLG@mondaynote.com
