What Happens If You Shrink an iPad?

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Ticonderoga Securities analyst Brian White is fueling speculation that Apple (NAS: AAPL) will launch what's being referred to as an "iPad mini," after visiting with component suppliers in China and Taiwan. But despite the "mini" moniker, the shrinkage doesn't actually refer to the physical size.

A year ago, the late Steve Jobs had referred to the batch of 7-inch screen tablets, mostly running Google (NAS: GOOG) Android, as "dead on arrival," noting that the form factor is too big to compete with smartphones yet too small to be usable as a tablet. Like most of Jobs' visions, he has been proved right while non-iPad tablets with 7-inch screens, like Research In Motion's (NAS: RIMM) PlayBook, predictably fall short.

The only 7-incher that stands to make it big is Amazon.com's (NAS: AMZN) new Kindle Fire, which comes with an aggressive $199 price point -- less than half of an entry-level iPad. The "mini" would refer to a lower entry-level price, potentially in the "mid-to-high $200 range," according to White. He predicts that it will show itself in early 2012 with an iPad 3 in tow shortly after, probably in the second quarter.

Apple would have to make a lot of sacrifices to get costs down to that threshold. The real question is whether it would be a good strategic choice.

Apple's brand has always commanded premium pricing, so taking out features to move down the price scale just to compete with Amazon seems out of character. The company's lineup is already pretty full, with all the major price points covered. The iPod touch is a smaller iPad for all intents and purposes, and I've always thought Apple should redub the device the "iPad nano" because of the similarities.

Product Family

Onboard Storage

Screen Size

Price Point

iPod touch8 GB3.5-inch (diagonal)$199
 32 GB3.5-inch (diagonal)$299
 64 GB3.5-inch (diagonal)$399
iPad 2 (Wi-Fi only)16 GB9.7-inch (diagonal)$499
 32 GB9.7-inch (diagonal)$599
 64 GB9.7-inch (diagonal)$699

Source: Apple.

There's not really a lot of room here to squeeze in a cheaper iPad without encroaching on iPod touch territory. The Kindle Fire has distanced itself from the iPad to the extent that the devices target different market segments. I can see why some analysts think the move makes sense, but I think Apple will do just fine without an "iPad mini."

At the time this article was published Fool contributorEvan Niuowns shares of Apple and Amazon.com, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Apple and Google.Motley Fool newsletter serviceshave recommended buying shares of Apple, Google, and Amazon.com and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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