Apple Drops the iPad Mini — and a Bombshell

Apple also unveils a muscled-up fourth-generation iPad

   

ipadminiphoto Apple Drops the iPad Mini    and a BombshellFor Apple (NASDAQ:AAPL) investors, the fall has been focused on three key events: the iPhone 5 reveal on Sept. 12, Q4 earnings results on Oct. 25 — and sandwiched between the two, today’s event officially announcing the highly anticipated iPad Mini.

Apple has a lot riding on the iPad Mini. The iPhone 5 has sold very well, but a series of missteps have resulted in the opposite of what was hoped following the latest and greatest smartphone’s launch. Apple’s stock price hasn’t climbed, but instead is off more than 6% since the release.

Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN) have released hot new tablets amid an Android surge, threatening Apple’s lead in the tablet space. While Apple still has the full-sized tablet market pretty much to itself (Tim Cook says iPad No. 100 million was sold a few weeks ago), smaller, cheaper tables are leading the charge in this holiday season’s battle for mass market acceptance. The long-rumored iPad Mini is Apple’s response to the growing popularity of 7-inch tablets like Google’s Nexus 7 and the Kindle Fire.

The Rumor Mill

As with the iPhone 5, Apple seems to have some serious leaks in its supply chain, because rumor sites had their hands on what appeared to be legitimate cases, logic boards and displays well in advance of Apple’s event. Based on this information, here’s what we were looking for at today’s event:

  • New 7.85-inch tablet named either iPad Mini or iPad Air.
  • Case options of black (anodized aluminum) or white, with the possibility of other colors (based on the multi-colored Apple logo on the invite).
  • Non-Retina display.
  • Specs similar to the iPad 2 — A5 processor, 1024 x 768 pixel resolution, 512 MB RAM.
  • Wi-Fi, 3G and LTE options.
  • Storage capacity similar to full-sized iPad (16GB/32GB/64GB), although some predict an entry model of 8GB to keep price lower.
  • Lightning connector.
  • Available Nov. 2.
  • Starting price is subject to considerable debate, with $259 and $329 being bandied about.

Apple’s Announcement

Here’s what Tim Cook & Co. unveiled at the event in San Jose’s California Theater:

  • The iPad show began with a bombshell. A fourth-generation, full-sized iPad featuring a new and improved ISP display, A6x chip (for double the CPU and graphics performance of the version unveiled in the spring), Lightning connector and optional Lightning to HDMI and VGA output. This wasn’t expected for another six months.
  • Next up, the iPad Mini. Which is indeed named: iPad Mini.
  • 1024 x 768 resolution, 7.87-inch display.
  • Dual-core A5 processor.
  • HD FaceTime camera and 5MP back-facing camera.
  • Weighs 0.68 pounds, is 0.28 inches thick.
  • Thinner side bezels than full-sized iPad make the iPad Mini smaller than the display size might suggest.
  • 10-hour battery life.
  • Smart Cover will be offered in multiple colors.
  • Wi-Fi and LTE is available.
  • Price starts at $329 for a 16GB version.

The rumor sites had a pretty good idea of what Apple was up to iPad Mini-wise, but Apple caught most of them sleeping with the early introduction of an all new fourth-generation iPad, which replaces the current iPad with Retina display.

Everything Else

Apple seldom stages one of these productions without dropping a series of product announcements along with the main reveal, and today was no exception.

In addition to the iPad Mini, the company reminded watchers that it’s not only still in the PC game, it’s one of the few PC manufacturers seeing significant sales increases in a slowing market. In his presentation, Cook pointed out Apple is now the No. 1 seller of desktop and laptop PCs in the US. This segued into new versions of the iMac and Mac Mini desktop PC systems, as well as a new premium laptop model, the 13-inch MacBook Pro with Retina display.

There also was a big push on iBooks, with a new version (as well as an improved authoring platform), increased language support and word that Apple’s iBook store now has 1.5 million titles (with 400 million downloads to date). Apple is positioning the iBooks textbooks and iPad combination for education, in an attempt to combat Amazon’s ambitions in that market.

The Verdict?

Apple is not going to give up the tablet market without a fight. Coming at the competition with the iPad Mini and a muscled-up full-sized iPad is a one-two punch that’ll be tough to beat. Apple appears to also be holding onto the $399 iPad 2, giving it a budget-level, full-sized offering.

There is bound to be some hand-wringing over the price point of the iPad Mini — it’s going up against established competitors that undercut its starting price significantly — and there is concern that the iPad Mini could potentially cannibalize sales of full-sized iPads, as well as the newly revamped iPod Touch (which starts at $299). Investors already were grousing, knocking AAPL shares down more than a full percent the second the price was announced.

However, Apple needed to make this move to stave off the threat posed by 7-inch tablets. It also needed to make some noise to help drown out any press received by Microsoft (NASDAQ:MSFT) as its Surface tablets finally hit the market.

Given the company’s reputation for making a premium quality tablet, providing a seamless user interface and the leadership of Apple’s App Store, I think the iPad Mini/fourth-gen iPad combo is going to result in a monster quarter for Apple. The Mini’s $329 price point probably is cheap enough to hit price-conscious consumers who have held off on buying a tablet, and it’s inexpensive enough, small enough and capable enough to appeal to parents looking for that must-have kids’ Christmas gift.

I also suspect Apple will sell a bunch to existing iPad owners — the ones who want their apps, e-books and movies on the go — and would shell out a few hundred bucks more for a pocketable version of their favorite gadget.

As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2012/10/apple-drops-the-ipad-mini-and-a-bombshell/.

©2014 InvestorPlace Media, LLC

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