Supply chain sources told the world it was coming. Now it seems that they were right. Apple (NASDAQ: AAPL) long-awaited pint-sized tablet -- the device that goes against everything Steve Jobs believed in -- is now in production.
The unconfirmed device looks fancy, but Apple has yet to explain how it can sell the iPad Mini when it already offers a device at every possible price point.
Some speculate that Apple will charge as low as $249 for the iPad Mini, making it $50 more expensive than the 3.5-inch iPod Touch, but $50 cheaper than the new iPod. At that price, Google (NASDAQ: GOOG), Amazon (NASDAQ: AMZN), and Barnes & Noble (NYSE: BKS) might have to lower the prices of their tablets even further. Both Google and Barnes & Noble sell their seven-inch devices for as low as $199. Amazon currently sells a standard-definition version of the Kindle Fire for $159.
Analysts believe that $249 is the sweet spot for Apple if it wants to continue to rule the tablet market. A higher price would make it more difficult to compete with lower-end hardware.
Apple faces two other problems, both of which analysts seem reluctant to talk about -- product quality and consumer perception. Right now, Apple makes billions off the fact that consumers perceive its products to be of a higher standard. They pay more, year after year, to acquire Apple devices.
On the day the iPhone 5 was released, Tonya Garrette -- an Apple devotee who waited in line for almost five hours to purchase the new device -- told Benzinga that she was an "iPhone groupie."
"I wouldn't give a s*** if it didn't have nothing," she insisted. "I would be in line anyway. I just love iPhones. I would never have any other phone but an iPhone for the rest of my life. So when they have iPhone 83, I will be in line."
Garrette represents the perfect kind of Apple customer -- one who will presumably maintain her loyalty until the end of time. She also represents a company that has spent years developing products that, if nothing else, are perceived to be premium items. Critics will continually argue over the level of innovation that accompanies each Apple product, but they rarely argue about the overall quality of these devices.
This is an important factor because, if the rumors are true, it seems that Apple might finally be willing to waver on quality. It is one thing to release a decent product that is completely devoid of innovation. It is another to sell a product that is truly inferior.
But that is what Apple plans to do with the iPad Mini, rumors claim. To keep costs down, Apple might take the guts of the 16GB iPad 2 (which currently retails for $399) and cram them into a device with a 7.85-inch screen. Without any additional bells or whistles, the iPad Mini would essentially be comprised of two-year-old technology.
Worse yet, few tech bloggers believe that Apple will add a Retina Display to the device, which is more expensive than a traditional display. But the expense is marginal. When shifting from the iPad 2 to the third-generation model, Apple only had to spend $11 more to upgrade the display. (The iPad 2 display was only $9 more expensive than the one featured in the first-generation iPad.)
At those prices, Apple can surely afford to bring its highly coveted display to the iPad Mini. Without it, the device won't be the same, and consumers might begin to look elsewhere for their seven-inch tablet fix.
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