The case for and against a 7-inch iPad mini

ipad mini coming in 2012 rumor

Once again, rumors are flying that Apple is gearing up to produce a 7-inch or 8-inch version of its popular iPad tablet — dubbed an “iPad mini” by the technology press. Initial reports came from The Wall Street Journal and Bloomberg. The basic idea is that since Amazon, Samsung, and now Google have been making big bets on the 7-inch form factor, Apple — as the undisputed leader in the tablet market — must respond.

However, the late Steve Jobs repeatedly derided the notion of tablets smaller than the iPad, and current Apple CEO Tim Cook recently characterized smaller tablets as limited products that don’t compete with the iPad.

Does Apple really need to get into the 7-inch tablet market? If so, how would Apple make its famously high profit margins and, perhaps most importantly, how well would a shrunken-down iPad work?

Does Apple need a 7-inch tablet?

apple ipad

Rumors that Apple has been working on smaller versions of the iPad are almost as old as the iPad itself. Every few months they seem to crop up again, and the latest reports may well prove to be as incorrect as every other report to date. It’s not like it hasn’t happened before.

That said, there’s essentially no doubt that Apple has worked in-house on smaller form factors for the iPad. Apple certainly experimented with a number of sizes when designing the iPad’s current 10.1-inch screen size — after all, it’s only when fiddling with these things and putting them in people’s hands that the advantages (and shortcomings) become apparent. It wouldn’t surprise anyone if Apple has continued to look into other screen sizes for both the iPhone and the iPad as the product lines have evolved.

However, Apple’s decision to go with a 10.1-inch screen size for the original iPad was carefully considered. When asked about the possibility of smaller iPads, Steve Jobs famously quipped that smaller tablets would need to ship with sandpaper so users could narrow the tips of their fingers to use on-screen controls. And Jobs has a point: One of the main reasons the Windows tablet world — and digital artists — gravitate towards using a stylus is that they are considerably more accurate than fingers.

Nonetheless, while the iPad’s 10.1-inch display is considerably more mobile than even an ultraportable notebook like Apple’s MacBook Air, it’s still too big for many people to comfortably slip into a pocket, bag, or purse. And consumers have shown reasonable interest in tablets smaller than the iPad. Arguably the best-selling tablet compared to the iPad has been the Amazon Kindle Fire. Although its sales seem to have fizzled out after the holidays, there’s no doubt it appealed to folks looking for a digital media device. Google is similarly betting on the 7-inch form factor with its just-unveiled Nexus 7 tablet. It’s too early to say how the market will respond to that.

Do 7-inch tablets win on size…or on price?

Nexus 7 tablet

Business-minded pundits argue the 7- to 8-inch tablet screen size is a separate market segment from the 10-inch-or-so screen size represented by the Apple iPad. If Apple wants to maintain its dominant position in the rapidly-growing tablet market, the argument goes, it must compete in the 7- to 8-inch segment. Otherwise Apple is just rolling over and letting other companies eat its lunch.

However, the most successful 7-inch tablets are almost purely media consumption devices. Sure, there’s a Web browser and Android is tucked down under the Kindle Fire’s interface somewhere, but the idea is primarily to lock consumers into Amazon’s digital content business. Initial estimates had Amazon initially selling the Kindle Fire at a loss, hoping to make up the revenue later through digital content sales. Google is taking the same approach with the Nexus 7, which Google is essentially selling at cost. Again, the approach here seems to be locking Nexus 7 users into the Google Play content ecosystem.

It’s also important to note these devices basically cost $200. Moving up to the $250 price point finds devices like the Barnes & Noble Nook Tablet (which is also strongly tied to the Barnes & Noble content ecosystem) and the Samsung Galaxy Tab 2 7.0. The Tab would be the cheapest example of a tablet that’s an effort at a pure tablet not locked to a content ecosystem. And Samsung has outright admitted that its tablet sales haven’t been stellar.

So, it’s an open question: Are consumers embracing 7-inch tablets because they like the size, or the price? It’s obviously not a black-and-white issue: Some folks undoubtedly would prefer a 7-inch tablet at any price, while some will by any size tablet as long as its cheap. However, other folks are probably looking at the $400 starter price for an iPad 2 — or the $500 starter price for the latest iPad — and thinking “Huh, well, for $200, this other tablet is probably good enough, even though it’s smaller.”

Does it need to be an iPad?

iPod touch

A factor that’s often being overlooked in discussion of a possible 7-inch Apple iPad is that Apple already offers a $200 media consumption device: it’s called the iPod touch. Let’s look the some of the specs:

  • 960 x 640-pixel touchscreen display
  • 802.11n Wi-Fi
  • Bluetooth 2.1+EDR
  • 8GB to 64GB of storage
  • Two video-capable cameras (VGA front, HD 960 × 640 back)
  • HD video output (via adapter)
  • Gyro, accelerometer, ambient light sensor

If you stretch the iPod touch’s 3.5-inch display to something like 7.8 inches, you pretty much have something competitive with Amazon’s and Googles media tablets. The Kindle Fire features a 1,024 x 600 screen resolution, while the Nexus 7 stretches out to 1,280 by 800 pixels. Apple could easily pack a similar resolution display into this hypothetical bigger iPod touch — and it would be able able to run most apps made for both the iPad and iPhone.

An easy argument could be made that Apple could compete handily with the Kindle Fire and Nexus 7 simply by offering a scaled up version of the iPod touch at a similar price point. If it doesn’t carry the iPad name, Apple could potentially demean the entire emerging low-end tablet market. The iPad brand would be reserved as a premiere tablet experience with essentially no competitors. Smaller form-factor tablets and devices like the Kinde Fire would essentially only be worthy to compete with Apple’s media players.

Retina or not?

A bigger question for Apple would be whether such a device should pack a high-resolution “Retina” display. If one were to look at such a device as a scaled-down iPad, that would mean cramming a 2,048 x 1,536 display into a screen measuring about 7.8-inches diagonal. That would give a pixel density of just over 328 pixels per inch (ppi) — that is just barely denser than the screens in the current iPhone and iPod touch, which come in at 326 ppi. Joel Burnstein lays out a solid case that a 7.8-inch tablet with a Retina display would be usable — despite Steve Job’s famous sandpaper comment — because it would essentially make interface elements for iPad apps the same physical size as interface elements on iPhones. And, after all, millions of people seemingly have no problems using iPhone apps.

Apple is a hardware company

The problem with Apple putting a so-called Retina display into a device with a 7.8-inch screen is cost: Apple could easily scale up something like the iPod touch to compete at the same price point as the Kindle Fire and Nexus 7, but adding a high-res display means Apple would have to charge more for the device — perhaps $250 to $300, if the company wants to preserve its famously high margins for its hardware products.

Couldn’t Apple use its mastery of its supply chain to offer an 7.8-inch tablet at the same price as the Kindle Fire and the Google Nexus 7, and sell it at cost or even at a loss? After all, Apple can afford it — the company has $100 billion in the bank!

Apple won’t do that. Unlike Amazon and Google, which are hoping to make up margins on their tablets through digital content sales, Apple makes its profits by selling hardware. Sure, Apple’s iTunes content empire pays for itself and earns Apple a little money — but the company’s profit centers are in hardware sales, not content sales. For Apple, digital content is candy that helps convince consumers to purchase hardware. Amazon and Google are taking the opposite approach, hoping hardware is the candy that will convince consumers to buy digital content.

The fact that Apple is a hardware company brings us back to whether Apple would do a 7-inch tablet at all. Think of a company like Samsung: It offers a dizzying array of phones and tablets, all intended to target different niches of the market. Its tablet offerings range from the Samsung Note “phablet” with a 5-inch display all the way up to Galaxy Tab units with 10.1-inch displays. The company’s phone line is a bewildering array of devices running a range of different operating systems. It’s a shotgun approach: the company is making as many products as it can and blasting them all out into the marketplace, hoping a few of them hit.

Apple doesn’t do that. In five years, the company has made a total of five phones. Three of them are still on sale to consumers! Similarly, it’s made just three tablets — and two of those are still on the market. Apple does make a range of computers, but it has never tried to cater to all markets. For instance, it never dipped into netbooks, and the variations on its MacBook, MacBook Air, and iMac lines are very limited compared to similar products from any other manufacturer. Apple has never tried to take a shotgun approach with products. It tries to design and manufacture the best product it can and trusts that enough consumers will value the quality, design, and attention to detail Apple puts into its products to sustain the business. Although Apple is a major force in the tablet, phone, and computer market, the company has never focused on market share. After all, Apple is not a top PC manufacturer, but it’s long had a virtual lock on the market for computers costing $1,000 or more. Similarly, Android is now far and away the leading smartphone platform, but Apple has locked up a considerable portion of the profits in the smartphone business.

This means is that Apple is unlikely to introduce a 7.8-inch tablet product unless it believes it can both make money selling the device and believes it’s a genuinely innovative product. It won’t be enough for Apple to merely have a device about the same size and price as a Kindle Fire or Nexus 7, for the same reason Apple doesn’t build netbooks. Apple doesn’t want to compete on price, it wants to compete on quality. If I were to bet, that probably means a hypothetical 7.8-inch Apple tablet will have a high-res display, run existing iPad and iOS applications without modification, and probably support Siri. And I wouldn’t be surprised if such a device sported a 5-megapixel camera and was available with optional 4G connectivity. I also wouldn’t be surprised if it were $300 or more.

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