You may not realize it, but you need more choices when it comes to mobile gizmos. So Apple, always there to anticipate what you might spend several hundred dollars on, has now filled what may be the last meaningful niche in the mushrooming market for tablet devices.
The highly anticipated iPad mini will be available starting Nov. 2, at an entry price of $329 for a 16-gigabyte model. The same model with cellular connectivity will go for $459. As with the regular iPad, models with 32 and 64 gigabytes of memory will also be available for more, with mini prices topping out at $659.
Apple investors were hoping that the mini would reenergize Apple's stock, which has fallen to around $620, a 12 percent slide from its mid-September peak of $705. But instead, Apple's stock price fell on the news, as investors seemed to worry that the price point is too high to outgun the rapidly massing competition, or that mini sales could cut into the market for the regular iPad.
Apple could have priced the mini below $200, which would have put it in direct competition with lower-end tablets like Amazon's Kindle Fire, or below $300, which is where Google's Nexus tablet is priced. Instead, Apple chose to shrink the regular iPad while retaining a premium experience. At the $329 entry price, the iPad mini will undercut the larger iPad by about $170, yet still be more expensive than most other tablets in the 7-inch range.
Apple will try to justify the higher price with a screen that's somewhat larger than competing tablets offered by Google, Samsung, Blackberry and others. Those manufacturers seem to have settled on a 7-inch diagonal screen, while the mini's screen measures 7.9 inches. That makes the surface area of the mini's screen about 35 percent larger, which can make a difference when surfing the Web and battling all the ads and other clutter than tends to jam the screen.
Apple also insists that its iPad mini isn't merely a phone stretched into the shape of a tablet. It has nearly all the functionality of the larger iPad, including the same software, along with access to 275,000 apps that have been optimized specifically for the iPad. The mini will also feature LTE cellular technology, the latest and fastest (though it only improves connection speeds if your service provider offers it). That meshes with Apple's goal of producing devices with a superior look and feel and intuitive usability.
At Apple's unveiling event, product guru Phil Schiller even bashed a competing tablet, Google's Nexus 7, pointing out that the iPad mini is thinner, lighter and faster. "The differences are night and day," he said. "It's a great experience, versus a not-great experience." What he didn't point out is that the mini is about one-third more expensive than the Nexus, rendering direct comparisons somewhat invalid.
News reports suggest that Apple plans to sell at least 10 million iPad minis through the end of the year, which would be comparable to sales of the regular iPad, which have totaled an astonishing 100 million since it went on sale 30 months ago. Apple can probably count on continued robust sales for one basic reason: The tablet market itself is growing so rapidly. Apple practically invented the market when it introduced the original iPad in 2010, and even this year its market share has been as high as 70 percent. The mini will help Apple defend its turf against an onslaught of competitors at both ends of the market.
But it's not clear that Apple will remain as dominant as it has been, which is what bothers investors. Even though its iPhone is a huge success, Apple's share of the smartphone market fell when Google started selling its Android phone. The same could happen in the tablet market, especially now that Microsoft's Surface device is set to go on sale. To combat that, Apple announced an updated version of its regular iPad at the same time it rolled out the mini, offering a faster processor and more features for the same price as the preceding model--which has basically become a semi-annual ritual for Apple.
What Apple hasn't demonstrated lately, though, is something entirely new that will lock in the high profit margins that made Apple the world's most valuable company over the last few years. It has mostly been rolling out incremental improvements on old products—which is basically what the iPad mini is. Apple still has a remarkable knack for squeezing money from devoted consumers, but without new innovations, that may not be enough to sustain the company's sky-high profitability.
Meanwhile, news reports suggest that Google and other manufacturers could come out with even cheaper tablets that are one-third the cost of the iPad mini. Because you need more choices. Or at least lower prices.
Rick Newman is the author of Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.