Reports of a scaled-down iPad with a 7.85-inch screen have been circulating widely just before the anticipated release of the iPad 3. There are a lot of implications, including the idea that Apple Inc. (Nasdaq: AAPL) will be churning out less expensive devices, despite the wage increases at Foxconn Electronics Inc. But for EBN's audience, the real questions are about supply, demand, and timing.
Feb. 28, 2012: Apple sends out invitations to a company event, believed to be the iPad 3 release.
March 1, 2012: Digitimes reports that volume production of the smaller iPad will begin by the third quarter.
The anticipated price point of the 7.85-inch iPad is $249 to $299, Digitimes reports. Apple is clearly trying to take share away from the low-cost tablets offered by Amazon.con and Barnes & Noble.
Apple already commands 60 percent of the tablet market, according to IHS iSuppli. Its biggest competitor in the fourth quarter of 2011 was itself -- iPhones ate into iPad sales, IHS iSuppli says. (See: Smartphone Surge Heralds End of Tablet Era?)
What kind of demand would there be for a 7.85-inch iPad? I think that, left to its own devices (pun intended), the smaller tablet would be a huge seller. The third quarter is the ramp-up for holiday sales, and Amazon.com showed just how profitable good timing can be with the Kindle Fire. Anyone shying away from the high price of the iPad in 2011 could certainly justify waiting a year to spend $249.
But the biggest problem with this scenario is Apple itself. If, as expected, it releases the iPad 3 next week, what will this do to demand? If consumers follow their typical pattern, they'll line up immediately for the iPad 3. These consumers presumably would be people who do not own an iPad 2.
Or would they be? Apple "fanboys" will buy any Apple product at any time for any price.
Assuming Apple already controls 60 percent of the tablet market, it still needs to reach the other 40 percent. Is this group made up of people who own other tablets? Or do they own no tablet at all?
As a nonowner, my inclination is to wait for the cheaper iPad. Normally, I'd want the biggest screen possible, but the current iPad price is still too steep for me. There are advantages to a smaller tablet, including portability. I'd still have to drag it out at airports, along with my laptop. But that's another issue altogether.
There is still a possibility, though unlikely, that the iPad 3 will be smaller and sell for less than the iPad 2. But if that were the case, why bother with the $249 iPad at all?
And just to confuse matters further, Digitimes reports that Apple is also expected to release an 8GB iPad 2 for $349-$399, and that it has lowered the price of the 16GB iPad 2 to $449.
Apple -- which now has a market cap bigger than the GDP of some nations -- is clearly ramping up production. Once a component is sold, whether to Apple or an EMS, suppliers book it as a sale. It is very difficult to return a product to a supplier, unless there is a clear defect.
For component suppliers not on the list, this could still be a boon. The events of 2011 have taught the supply chain that single sourcing is a dangerous game. Apple should always have at least two sources for the components it uses. If cost is a factor, suppliers should be looking to develop comparable, lower-cost parts to get a foot in Apple's door.
This will no doubt spur Amazon, B&N, and Samsung to provide even less expensive or differentiated tablets. If there is any downside to all of this, it's to Apple. How long can a company compete against itself? Is the iPhone the real threat to the iPad? I really don't know. I'll be holding on to my phone until my next upgrade comes along. But I'd like to ask those Apple fans out there what they think. Will you buy a cheaper iPad?
Would I buy a cheaper iPad? Many current Apple iPad users probably would if the form factor is different, that is, if it is smaller and can readily fit into a jacket pocket. But isn't the iPhone itself able to perform the same functions? Businesses might, though, and that is one set of buyers that Apple is targeting with a wide range of products.
I have no intentions of buying an iPad just because of the price. I have looked at tablet PCs over the last year and haven't quite decided why I should add one to the electronic products I carry around. I have a Samsung smartphone that is bigger than the iPhone, a Blackberry and a laptop. Why do I need another device? I believe my Samsung Galaxy phone qualifies enough as a tablet PC.
I might buy a cheaper iPAD if i don't have to pay through lower functionality, although i'm more of a nokia and android fan.
I find the news that iPAD sales was eaten into by iPhone sales, that speaks volumes, as efficient smart phones are just as good as tablets, except for screen size.
I think it all depends on the kind of customer: those who buy just for the fun or hype of it, and those who buy out of the need for such protable, smart devices.
for the later, a cheaper iPad, might just not make any difference, but for the former, it could make a big difference.
Android devices and tablets are coming out in all different shapes and sizes, specifically by manufacturers like Samsung, HTC, Motorola, and now ZTE, among others.It would make sense that Apple looks to provide additional form factors.I think a smaller tablet would be a good seller.
Thanks Barbara for the article. From consumer perspective bandwagon people would love to buy iPad for cheap price irrespective of features or additional functional parts. I bet you, normal ritual (queue) is likely to double by the time Apple launches its iPad 3
@Barbara: I would consider purchasing the cheaper iPad - but I am in the population that currently doesn't have one at all. Your question seems ro be directed to current, larger iPad owners?
Price is certainly important for me when it comes to buying technology. However, I apply this rule differently for work and leisure.
When I buy technology for leisure, I am very price conscious. I think twice before I decide to buy something that I will use to entertain and to use as a hobby every now and then. At least, I look for cheaper deals.
However, my attitude for work related technologies is different. I do not bother with the price first. My first concern is 'will the product do what I want it to do?'. For example, I would not mind paying $2500-$3000 for a performance laptop that I will use everyday to work with as long as it does what I need it to do. Having said that I am not going to pay more than $3000 either because I know good enough alternatives do exist for less.
Regarding a cheaper iPad, I certainly cannot see a place for it on my workbench. I really don't know see how I can make use of it. The best application I saw for it in my line of business was a digital oscilloscope. The concept was great: small measurement tool with little cable clutter and little real estate requirements on the desk. Unfortunately, the bandwidth of the iPad application was quite limited and therefore it remained quite basic in terms of the functionality it offered. Since I also don't need to impress any execs or clients in a meeting room by showing off with the most recent model of an iPad as I flick through the pages of a marketing/sales presentation either, I cannot think of how I can make it useful for my work.
For leisure, I think I would buy a cheaper iPad. I don't need a huge RAM and a Quad processor for playing a few games, listening to music, browsing the web and watching videos etc. I don't even need a battery that will last for 10 hours. So why pay more?
Barbara, I think most of the peoples may prefer IPad for a lesser feature. For them rather than features, the Apple brand matters lots, especially for those outside US. Some debates are going on whether I pad has to be offer in smaller screen dimension or not. The smaller screen size can reduce the pricing factor, but compatibility/resolution for the images and apps may get affect.
Are you sure that 100M people will buy iPad if it is substantially lower priced? To be honest, are you assuming there are readily available 100M people with a lot of disposable income whose #1 priority is to get entertained and to feel satisfied by merely the ownership of an iPad? I hope that consumers worldwide eventually come to some sanity and truly understand the value of an iPad. It is not a computer, it is not food and water. Instead of pushing the iPad to young kids, parents should spend quality time with the children or pay for a trip to let the kids explore the nature and to encourage the children to develop better inter-personal skills. For the business travelers, wait for Win8 tablet and push the manufacturers to release truly thin (<10mm) and light (<2lbs) notebook PC with touch and apps capabilities. For those who like to read books, get a black & white Kindle or Nook. I am sure that your hands feel so much more relaxed with something weight only about half a pound. For the younger adults and older folks, keep your minds and eyes open, many things (friends, mountain, river, sea, ...) in your surrounds are worthed your time to listen / see / touch. Don't get too hung up on machines!
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
To save this item to your list of favorite EBN content so you can find it later in your Profile page, click the "Save It" button next to the item.
If you found this interesting or useful, please use the links to the services below to share it with other readers. You will need a free account with each service to share an item via that service.
Tweet This