Mini Tablets: The Gap in Apple’s Armor
Woody Zantzinger
Apple’s iPad has been dominating the tablet market.
Since 2010 Apple has sold more than 84 million iPads around the world and controls 68% of the tablet market as of Q1 2012. Neither Microsoft, Google, Amazon, Samsung nor any major competitor has gained any notable market share with their own full size tablet. The one exception to Apple’s control of the tablet market is in mini tablets, such as the Nexus 7 and Kindle Fire.
Amazon released the Kindle Fire in 2011 at a starting price of $199. Running a heavily modified version of Google’s Android OS, its screen size is only 7 inches compared to the iPad’s almost 10 inch screen. Google released the Nexus 7 this year, and has already received high reviews from tech blogs and websites. So how have these two tablets fared against the competition? If we remove the iPad from the field, and mini tablets are dominating the remaining market. Larger tablets (such as the Motorola Xoom and Samsung Galaxy Tab) simply haven’t succeeded against their smaller competition, possibly because of the direct competition with Apple for these higher priced tablets. For a price of $600 the iPad seems to be an easy choice for consumers according to the sale numbers, but for consumers with less to spend there are simply less options.
So what does this mean for Apple? Apple has had a history of using various solutions to keep competitors from entering the market beneath them and pushing them out. Price conscious consumers have been able to join the Apple ecosystem by buying older iPhone models or smaller products, such as the iPod Nano. The image below shows that right now Apple is lacking a cheaper alternative for it’s pricey tablets. Google has exploited this opening in the market before. Android was originally launched on cheaper devices to get a foothold in the mobile space. Eventually it moved on to more premium devices (Such as the Nexus S or Galaxy III).
Apple device pricing, showing the gap where consumers are buying the Nexus 7 and Kindle Fire. Source.
I’m sure Apple is taking notice of the success of smaller tablets. We’ve been reporting rumors of an iPad Mini to be announced with the iPhone 5 for about a month now. Are these rumors true? Based on the analysis above I would certainly think Apple is going to offer a low cost solution. However it doesn’t have to be a new tablet. A $200 iPad Mini would certainly put the world’s biggest tablet maker back in direct competition with other manufacturers but Apple could also discount the price of the iPad 2. Based on Apple’s history of discounting iPhone models, the discounted option might make more sense. They need to do something because for now mini tablets seem to be the one piece of tablet market Apple doesn’t have cornered.
iPod IS the iPad mini, take a look at the “gap” you spoke of for the lower-end tablets. And then take a look at that pretty blue triangle you have for iPod that seems to fit quite nicely in that gap.
You are looking at this backwards…
Apple was making extreme money of iPod and iPhone and went “Hey! There is an entire market out there for higher end devices that cost more.” That was the iPod Giant.
iPad was the solution for that high-end gap. Why would Apple go back to their original design when iPad is doing so much better than iPod. The gap you are alluding to doesn’t exist and never has. iPod has always fit the ‘cheaper’ and ‘smaller’ tablet market.
There is a gap, and apple will fill it. Where Abstract Thinker is confused is on the market history of the gap. Apple has historically “created” their own markets and demand for their products. They charge the higher prices because they can, and will. Excellent products, but you are buying and paying for the brand image as well. Apple has one of the best brand identities in the world.
Apple’s history with the proprietary system to hardware, iPod, iPhone, and iPad were all markets created by Apple. Yes, there were mp3 players before the iPod, but the iPod created the market for itself. There were mp3 players, and then THE iPod. You don’t need to be first to be the best (MySpace vs Facebook). There was no iPhone/iPad market. That was purely an Apple invention.
One needs to make note of why Apple v. Samsung is in court right now. Samsung makes mp3 players, phones and tablets. Apple makes THE iPod, THE iPhone, and THE iPad. Samsung strategically, regardless of right or wrong, leveraged the success of Apples brand name and image to help propel their (Samsung’s) products
The iPad Mini is one of the rare cases where Apple has not created the market (well, they created the parent market of the mini with full size tablets) and are joining later to the game. Apple will sell plenty and make very nice profit off of the iPad Mini because they know their customer base and know how to keep customers. Apple customers often stick to the brand/image and often will buy more Apple products to go with their current Apple products.
Its not always about the fastest or best device, its if you can sell it. Apple could sell their zombie customers anything. That is why Samsung created a whole ad campaign that mocks the Apple Zombie Users in line for a new iPhone that has worse/poorer specs than the Galaxy III. Samsung missed the point. Its not about having the best hardware/software as much anymore (although important and needs to be competitive) but more so about the brand and the experience.
Won’t Apple just fill in those price points with older models, just like they have with the iPhone? These graphs a pretty flawed when you include the iPhone3g and not the iPad1.