Commentary

A Lot Of Buzz For Apple's Smaller IPad

As usual, Apple hasn’t told us what it has in mind for tomorrow’s 10. a.m. PT event in San Jose but “you can't click through more than two hyperlinks on the Web right now without coming across predictions, speculations, rumor-mongering, and leaked information,” writesPC Mag’s Daniel Murphy, who, like just about everybody else, says that a smaller, cheaper iPad will be the star of the show.

Murphy goes on to give the reader who isn’t already a “stalwart Apple aficionado” reasons to “resist the hype” and figure out which tablet is best for his or her individual needs –- be it an Android, Amazon Kindle Fire, Barnes & Noble Nook, regular sized iPad or “other” -- but the bottom line is that just about everybody also expects the new device to be a contender right out of the box.

“Everyone and their dogs have confirmed” that the new Mini “will have a 7.85-inch screen that's not Retina, an A5 processor and 512MB of RAM. The rest -- price, capacity, colors, model -- is not certain yet,” writesGizmodo’s Jesus Diaz.

AppleInsider’s Neil Hugheshas seen an SKU list of 24 different Mini configurations“suggesting four different storage capacities and two color options.” An 8-gigabyte, 7.85-inch model could serve as an entry-level device, he says.

Phys.org’s Glenn Chapman quotes Sterne Agee analyst Shaw Wu, who believes the “iPad Mini ‘is the competition's worse nightmare’ but that sales will depend on how Apple prices the device. 

‘We do not believe Apple needs to price as low as $199 to match Google's Nexus 7 and Amazon's Kindle Fire HD but believe a price point of $299 or $349 makes sense…. The key question is whether Apple decides to price in-line with its margin model, or does it get aggressive to go for the kill against competitors?’”

Price is indeed the “big variable,” writes Tech Crunch’s Darrell Etherington, pointing out that “margins are Apple’s bread and butter” and that “unlike Amazon, Apple just wouldn’t market a device on which it was merely breaking even or losing money, since it isn’t driving the bulk of its revenue from its digital content ecosystem.”

Based on KGI Securities analyst Ming-Chi Kuo’s estimate that the materials and manufacturing costs of an entry-level iPad Mini will be $195 (for a 16GB Wi-Fi only device), he thinks Apple will go for 40% gross margin with a $329 retail price.

The company has its eyes on is an old ally –- schools -- with the new devices. “Apple executives plan to make a point of highlighting the iPad’s educational capabilities at tomorrow’s event, according to a person with knowledge of the planning,” writes Bloomberg’s Adam Satariano.

It already has the world’s biggest education sales force, Clever Inc. CEO Tyler Bosmeny points out, and “Apple’s sales staff meets regularly with school administrators and procurement officers across the U.S.,” Satariano reports. It also pays for district officials to learn about new products in Cupertino.

“Once these tablets get into the $200-to-$300 range, we are going to see a real aggressive uptake in the K-12 market,” Vineet Madan, an SVP at McGraw-Hill’s education unit, tells Satariano.

Using Steve Jobs’ own words as support (when he spoke to analysts about smaller tablets a couple of years ago), The Guardian’s Charles Arthur also concludes that price will be a major “testing ground” for a market that “isn't that big -– so far.”  He points out that not only is Amazon “pricing the Kindle Fire pretty much below cost,” so, too, is Google with the Nexus 7.

USA Today’s Jefferson Graham writes that the iPad Mini won’t be the only news tomorrow. “New models of the iMac desktop machine, MacBook laptops and the Mac Mini component computer are likely,” as Sterne Agee's Wu tells him. “There hasn't been a refresh in over a year," says Wu, predicting faster processors and stronger graphics for the new models.

Graham also polls consumers near an Apple Store in Los Angeles about what would excite them in a smaller iPad. Ars Technica has a forum where folks weigh in with what they would like to see, or not see (like too much weight), in the new Minis. Among those live blogging the event will be CNET’s Josh Lowensohn, The Verge’s Dan Seifert and Gizmodo.

Say what you will about Apple, you will say something.

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