The Wall Street Journal this morning jumped into the Apple iPad Mini rumor-mongering game, asserting that component suppliers in Asia are getting ready "for mass production" in September of a tablet computer with a screen of less than 8 inches, smaller than the current 9.7-inch screen. A move in that direction would be a direct attack on the market niche for smaller tablets, in particular the Amazon Kindle Fire and the brand new Google Nexus 7.
The story asserts that the company is working with screen makers LG Display and Au Optronics.
A small-sized iPad could also threaten players in the e-book market, like the Barnes & Noble Nook, which include tablet-style features like Web browsing. The Kindle Fire and the Nexus 7 both are priced at $199; there has speculation that Apple could price a little above that level and still dominate the market at the smaller screen size. And if they priced right at $199...well, that would not be very good news for the rest of the players in the market, who have carved out a space in part by filling a niche that Apple had ignored.
Apple this morning is up $2.38, or 0.4%, to $601.79.
Update: Topeka Capital analyst Brian White weighed in on the subject this morning, asserting that a new, smaller iPad should expand the market, rather than posing a major threat to sales of the existing versions of the iPad.
"We would expect the cannibalization of the current iPad by the 'iPad Mini' to be relatively minor and potentially in a range of just 10-20%, while the market opportunity could eventually be larger for the iPad Mini given the growth trends in developing countries," he writes. "Although we would expect the iPad Mini to have a lower margin profile versus the current iPad, the magnitude of the difference will largely depend on what features are left out of the smaller iPad and thus the gap could be relatively minor. At the same time, we would not be surprised if certain consumers end up owning both a regular-sized iPad and an iPad Mini, swapping between the two devices for different occasions. With the introduction of iCloud, the content on the two iPads can be automatically duplicated and thus easier to swap between Apple devices. Although there are 7-inch $199 tablets on the market, we believe Apple would come in with a higher quality 7.85-inch iPad Mini for $250-$300 that would lure certain consumers away from these competitors with an overall better experience that includes a much more robust ecosystem. Ultimately, we view the potential addition of the iPad Mini as a long-term positive for Apple’s iPad franchise and necessary to keep competitors from trying to control the lower price point segment of the market."
