How Apple could own the 7-inch tablet market, too

Making bets on what Apple will do in the future is, as they used to say, a mug’s game. Most predictions, like the June “iPhone 5 launch,” are based on wishful thinking or sources so thin you can see through them.

I’m not playing that game. But if well-connected reporters at Bloomberg and the Wall Street Journal are correct, the possibility that Apple is going to launch an iPad Mini — a smaller iPad — in the near future merits serious consideration. If it does, it could deal a near-fatal blow to Android as a tablet platform.

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Why Apple would reverse Steve Jobs’s decision to forgo small iPads I know — Steve Jobs always said he’d never go for scaled-down devices because they offer a lesser user experience and would muddle the brand. But he also said he’d destroy Android, which he considered an iOS knockoff. In any case, Jobs is gone now, and CEO Tim Cook can read a spreadsheet with the best of them. Simply put, Android is a threat to Apple’s dominance in the tablet market, and it’s worth Apple’s trouble to blow it away.

Consider Gartner’s April 2012 report on tablet sales. In 2011, Apple owned two-thirds of the market with 40 million sold, Android devices lagged far back at just under 29 percent (17.2 million), and there were no other notable competitors. Fast-forward to 2016: Gartner predicts that Apple’s share drops to 46 percent (169.7 milion units) with Android climbing to 37 percent (137.7 million), while Microsoft, which had no share at all last year, grabs nearly 12 percent of the market (43.6 million). The report was published in April and prepared even earlier, so it could not take into account Microsoft’s Surface tablet and Google’s Android-based Nexus 7, devices that may well win large numbers of buyers at different ends of the market.

Yes, some of Gartner’s numbers are hard to believe, such as predicting Research in Motion will sell 2.6 million BlackBerry PlayBook tablets this year and 17.8 million in 2016 — the BlackBerry tablet has been a spectacular flop, with hundreds of thousands of units sitting in warehouses unsold and unwanted. It’s not clear RIM will even be in business in 2016, as sales spiral downward. The Android sales figures are also suspect; only Motorola Mobility reports actual sales numbers, and figures for the rest of the market are guesstimates based on what stores say they ordered. Plus, after the Gartner predictions appeared, Amazon.com’s Kindle Fire turned out to be a flash in the pan in terms of sales, not a new growth area for Android.

Still, it seems that some Android tablets are hitting their stride, especially those from Samsung, and there’s real demand for them, even beyond the 10-inch category. Look at the passionate uptake of Samsung’s 5-inch max-phone/mini-tablet Galaxy Note as an example.

What would be a realistic strategy for Apple? Unlike its historical positioning as a niche player in the computer market, Apple aims to dominate every mobile market it plays in. Tablets are a huge contributor to its margins and earnings. Cook won’t give up even a point of share without a fight, and breaking Jobs’ “no mini tablet” rule is a strategy that makes a ton of sense.

Cheaper and better is better When Hewlett-Packard killed its TouchPad tablet earlier this year, it held a fire sale, pricing the WebOS-based tablets at $99. They flew off the shelves. You can disagree about the reasons HP failed to make a go of the TouchPad, but it’s impossible to ignore evidence of a nascent market for cheaper tablets. If an inexpensive tablet had the cachet of Apple, think of how popular it could be.

How cheap would an iPad Mini have to be? Given the price of competitors like the new Nexus 7 and the Kindle Fire, both going for $200, Apple could price a 7- to 8-inch tablet at $225 or $250 and still make a good profit while attracting lots of folks who can’t afford to spend $500 or more on a full-size iPad. We don’t yet know if Cook shares the creative genius of Jobs, but we do know that the new CEO is a master of supply chain logistics and could surely find the manufacturing partners to construct a tablet at that price point.

A mini tablet with more screen space Some folks might argue that a small version of the iPad wouldn’t offer a decent enough experience to sell well or that the $200 iPod Touch already fills the niche for Apple. I disagree. A small tablet is ideal for consuming content, whether it’s an e-book, a movie, a magazine, or an article on a favorite website — which Apple has made easier to do on reduced screens with its Reader capability in Safari. But at 7.8 inches or so (the rumored size of the rumored iPad Mini), it would also be a lot easier on the hands and eyes than a smartphone for chores like email and light note-taking. And as Matthew Panzarino of the Next Web points out, 7.8 inches along the diagonal would give the iPad Mini a lot more screen real estate (measured in square centimeters) than the 7-inch Nexus 7 and Kindle Fire.

Apple’s vast store of apps is a huge selling point, and scaling them down a bit from iPad size would not be a terribly difficult chore for developers tempted by a larger addressable market. After all, Apple’s iOS SDK is designed for creating apps that work at multiple screen sizes: 9.7 inches for iPads and 3.5 inches for iPhones and iPod Touches.

We’re always hearing about the next iPad killer, and we’ve seen how poorly that’s worked out for the Kindle Fire. Users want cheap, but they also want good. The iPad Mini would fit that bill, while giving Apple a nuclear missile to toss at Google and Amazon.com.

I welcome your comments, tips, and suggestions. Post them here (Add a comment) so that all our readers can share them, or reach me at bill@billsnyder.biz. Follow me on Twitter at BSnyderSF.

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