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iPad Mini Could Dampen Android Tablet Sales

iPad Mini Could Dampen Android Tablet Sales
July 12, 2012 2:18PM

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"The most successful Android tablets' key points of differentiation are price and size," wrote Piper Jaffray analysts Gene Munster and Douglas Clinton. "Strategically, we believe the launch of a smaller screen, cheaper iPad eliminates the two biggest unique features for Android tablet makers." Apple is rumored to be readying an iPad Mini for the holidays.

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Industry analysts expect Apple to take the wind out of the sails of its tablet rivals by launching a new iPad mini in a 7-inch or 8-inch form factor in time for this year's holiday shopping season.

"If Apple launches a sub-$300, 7-inch product into the market later this year as rumored, we expect the company's grip on this market to become even stronger," said Tom Mainelli, a research director at IDC.

Piper Jaffray believes Apple could sell 4 million to 6 million mini-iPad devices during this year's traditionally strong holiday shopping season -- equivalent to 20 percent of total iPad sales in the fourth quarter

"The most successful Android tablets' key points of differentiation are price and size," noted Piper Jaffray analysts Gene Munster and Douglas Clinton on Monday.

"Strategically, we believe the launch of a smaller screen, cheaper iPad eliminates the two biggest unique features for Android tablet makers," Munster and Clinton wrote in an investor note.

Lower Price Points Ahead

Though total Android shipments dropped sharply in the first quarter, Google is hoping that the 7-inch Nexus tablet it is building in partnership with Asus will help to reverse the trend. Slated for launch later this month, the Nexus 7 will enable Google to ensure that the new devices stay up to date with each new release of Google's Android platform.

"The search giant's new tablet will run a pure version of Android, whereas the [Kindle] Fire runs Amazon's own forked version of the OS that cuts Google out of the picture," Mainelli said.

Still, other tablets are coming that will directly compete with Apple 10.1-inch iPad offerings. For example, Microsoft's own Windows RT-based tablet is expected to launch as early as October.

The price of Microsoft's first new Surface tablet will be a critical factor when it comes to winning over consumers. Moreover, ARM-based Win 8 tablets will enter the market without the backward compatibility -- and installed base -- that most people expect from a Windows machine, and so their "success in the tablet market is far from guaranteed," Mainelli said.

To compete in the tablet market with Apple, Mainelli said, rivals must introduce products at notably lower price points than Apple's iPad.

"We expect a new, larger-screened device from Amazon at a typically aggressive price point," he said.

Making All the Right Moves

Apple has been making all the right strategic decisions to ensure that its tablet market dominance continues unabated.

"Apple's move to position the iPad as an all-purpose tablet -- instead of just a content consumption device -- is resonating with consumers as well as educational and commercial buyers," Mainelli said. "And its decision to keep a lower-priced iPad 2 in the market after it launched the new iPad in March seems to be paying off as well."

The release of an iPad mini in advance of this year's holiday shopping season could continue the trend -- especially if it is priced at $299 with 16GB of storage, given the $199 8GB iPod Touch and $399 16GB iPad 2, according to Piper Jaffray.

Potential Android Killer

"We believe the smaller iPad, while potentially cannibalizing 10 percent of full-size iPad sales, could take 30 percent of total Android tablet sales in the December quarter," Munster and Clinton said.

IDC forecasts that Apple will retain a 60.8 percent share of the global tablet market in 2016 -- up from the firm's prior forecast of 58.2 percent. Likewise, Piper Jaffray remains confident about Apple's tablet sales.

"Longer term, we remain confident that Apple will maintain a majority, and potentially increasing, share in the tablet space," Munster and Clinton said.

Tell Us What You Think
Comment:

Name:

Lawl27:

Posted: 2012-08-28 @ 8:08pm PT
ZOMG an iPad mini finally *sets iPad 2 on fire and buys an iPad mini*.

ambrish:

Posted: 2012-07-21 @ 10:35pm PT
can u reduce it to low cost....

James:

Posted: 2012-07-12 @ 10:11pm PT
IMHO a $299 Ipad mini WITH A 64 GB MICRO SD PORT would blow away the Nexus 7.



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