Ronnie05's Blog

Does Apple need a 7″ iPad?

Posted in Industry updates, Mobile Devices and Company Updates by Manas Ganguly on May 16, 2012

iPad has been the the force-majuere in the Tablet segment and has held strong against the multiple Androids and a one -off RIM Playbook as well. However in Q4, 2011, it was Amazon Kindle Fire Tablet launched the most credible counter offensive to Apple iPad monopoly. Not only did Amazon Kindle Fire impact Android numbers positively by selling 4.8 million units in the holiday season, but it has caused a pause and re-think in Apple on the feasibility of low cost 7″ Tablets. There are rumours about a 7″ iPad from Apple now.

The impact of Amazon: After taking 17% of the shipments in Q4,2011, Amazon’s Kindle Fire slumped to 3.7% market share in Q1, 2012

Now then, does Apple really require a 7″ iPad?

Reasons in favour

1. Apple may have burnt its hands and gone on the path of bankruptcy by not choosing to go with the cheaper computer in the early 80s. So there is meat in the arguement that no segment be left out. A stripped down iPad could fire up sales at low margins for Apple.

2. Apple could also block Android more effectively in Tablets – one of the hottest device domains in the future.

3. Apple could also increase its user base and graduate more users too its unmatched content eco-system and hope to make more gross money out of it.

But on the other hand

1. Does Apple needs volumes? Its exclusivity has been its USP and its profit/revenue/earnings per unit has been the stand out even as Google/Android have generally failed in terms of moentizing their services effectively.

Apple has also historically avoided playing the volume game, preferring instead to have a niche market following while cornering most of the industry profits. Even in the mobile phone business, where its iPhones are selling like hotcakes, its global market share is in single digits but it takes up more than three-fourths of the industry’s profits because of its high margins.

2. The Tablet market is far from mature and a carefully positioned mid end ($300?) 9.7″ earlier generation iPad2 could possibly be a better solution not only in terms of bocking Amazon and Android but also gathering volumes. Carriers would give their left arm, right arm and more for a data machine like the iPad on reduced prices in their network.

This strategy could meet the demand for the low-cost tablets to a good extent without having to develop a smaller tablet.

3. A cheaper 7-inch tablet appeals to a different segment of population that includes mostly price-conscious consumers. The entry of the Kindle Fire has lowered the cost barrier and will pave the way for new consumers entering the tablet market. This will serve to whet consumer appetite for tablets and may even make customers shift to a costlier tablet such as the iPad for their future purchases.

4. Finally then, the iPad with its 9.7″ screen defined the Media tablet space – a tablet which is broadly based on media usage which is in concurrence with Apple’s long term strategy around media – photos, songs, videos, books. Its widespread adoption led to trends such as BYOD enterprise use.

Essentially, the iPad was first a media machine and secondly a mobility device. That is the way Steve Jobs defined the tablets: he ranted the 7″ tabs were dead on arrival.

This size is useless unless you include sandpaper so users can sand their fingers down to a quarter of their size. Users have no need for a pocket sized tablet when they already have a smartphone. – Jobs

Considering the 7 factors listed above, i do think that a 7″ iPad doesnot cut ice for Apple . A low cost 9.7″ iPad (still at a premium from the market) is better. But for the record, i will go wth the late Steve Jobs – Mobility is for smartphones. Tablets are a different breed….

Interestingly a tweet that caught my eye even while i was publishing this post, needs a mention here… Amazon prepping a 10″ iPad equivalent. Interesting but, largely predictable


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