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Behind Apple’s Alleged Move to Small Screens

Several news outlets are reporting today that {complink 379|Apple Inc.} is experimenting with smaller displays for an upcoming version of the iPad.

The general consensus is that Apple, in an effort to compete with chief rival {complink 4751|Samsung Electronics Co. Ltd.}, is broadening its tablet portfolio. Samsung offers its Galaxy Tab in 3 sizes: 7-inch, 8.9-inch, and 10.1-inch, at three different price points. Apple's iPad and iPad 2 have a 9.7-inch screen. Analysts also point out that Amazon's well-selling Kindle Fire, with a screen of 7 inches, is eating away at Apple's tablet market share.

In addition to offering consumers more choice in tablet sizes, analysts believe that by moving to an 8-inch screen, Apple is seeking to lower the price range of the iPad. The iPad 2 sells for $499. A Galaxy Tab with a 7-inch screen sells for as low as $281; a 10.1-inch Tab is around $379.

I'm not so sure that Apple is chasing Samsung. I think there's more going on behind the screen (pun intended).

Almost a year ago to the day, IHS iSuppli reported that Apple had invested more than $3 billion in LCD technology. (See: Apple Defies Risk-Management Convention.) The recipients of this investment were thought to be {complink 3074|LG Electronics Inc.}, {complink 4907|Sharp Electronics Corp.}, and {complink 5648|Toshiba Corp.}, and the investments would be used over a two-year period. Today's news reports say that the companies experimenting with Apple's new screen include Korea's LG and AU Optronics in China.

Last year, IHS iSuppli reported:

    The agreements would involve the supply of Apple's retina display, used in the iPhone and iPad. The retina display employs the use of advanced in-plane switching (IPS) and low-temperature polysilicon (LTPS) technology that provides extremely high resolutions in small displays by using pixels that are smaller than the human eye can perceive. Since IPS LCD production is limited to suppliers that own or have access to the IPS license, it is a challenge to match demand to suppliers that own production capacity and IPS licenses.

Better resolution is another advantage analysts cite in Apple's move from 9-inch to 8-inch screens. Smaller displays are denser — there are more pixels packed in to a smaller space — so they do provide a crisp view. Smaller screens also produce higher yields in display manufacturing. If Apple were to produce the 8-inch screens using the same technology as it is now, it could achieve both better resolution and cost savings on the smaller screens.

But Apple is known for leapfrogging its competition by offering significant technology advancements on its product versions rather than incremental improvements. So I think if Apple is committing to a smaller display, it will be more than just a smaller display. It will have technological advantages over the screens the iPad is using today.

The added advantage to Apple, if it is using newer technology, is that the iPad can still command premium pricing. If Apple is going to maintain its share price of $500, preserving a premium price makes sense. Then again, volume sales of a lower-priced iPad could boost Apple's already-hefty share of the tablet market.

What do you think Apple is trying to do?

12 comments on “Behind Apple’s Alleged Move to Small Screens

  1. _hm
    February 14, 2012

    It may be that Apple will offer iPhone + iPad in 7inch format. As per Apple this may be unique market yet to be explore.

     

  2. saranyatil
    February 14, 2012

    Analysts must be having a tough time to beat the heat in tablet segment, I think reducing the size is definitely a good move especially with their proven and exclusive display technology. The display does magic on our eyes really awesome.

  3. Daniel
    February 15, 2012

    Barbara, you are right. The I Pad's tablet market share is now sparing with competitors like Samsung and Amazon because of size concern. Apple had only 9.7″' screen size and I feels that it's a drawback in size. They have to offer it in different size like 7/9'' at different price point. But performance and power wise Apple is much superior to its competitors.

  4. elctrnx_lyf
    February 15, 2012

    New size ipad will definitely increase the apple market share, and if apple could find a cheaper option with AUO it will be more beneficial to customors. Why I care if it is 7″ when I can use the Apple device.

  5. Adeniji Kayode
    February 15, 2012

    If that ie going to be the combination . It may not be a bad idea at all.

    But what would  happen to those that bought their Ipad and smartphone separately

  6. Adeniji Kayode
    February 15, 2012

    I think that is a good a good idea, if Apple makes different screen sizes for their Ipads. This would allow users to make choice. well based on their pockets and nature of use.

  7. bolaji ojo
    February 15, 2012

    Apple's strategy has always been to enter the market with a high-end product and squeeze as much profit from that as possible. Then, later, it introduces the slightly cheaper version to gain access to a wider customer base. That's what the company has to do with its tablet PCs.

  8. Barbara Jorgensen
    February 15, 2012

    The more I think about it, the more I agree that providing consumers with a choice is the right move. I may spend money on scaled down iPad if the price is right. I did hear something that threw me, though: the iPad 3, whether it is 7 inches or 10 inches, will run on 4G. Doesn't that ratchet the price back up?

  9. alawson
    February 15, 2012

    Another great topic and post, Barb.  Just an opinion of course, but I'm going to venture the same guess I did the first time Apple leaked plans for a smaller-screened device.  I think they are wanting to capture more female marketshare. The beauty of a Kindle Fire and some other Android devices is simple from this respect…they fit in a purse. I have literally been party to several conversations where this was a major factor in the buying decision. I also think that, outside a certain tech-skilled set of women, this is an area Apple has failed to dominate.

  10. Daniel
    February 15, 2012

    Bolaji, Apple recently lost its patent war with a Chinese company. This mad shed almost all Apple Ipads from their shelf and there is no business for IPad in China. In that scenario, would you mean that Apple comes up with something new for Ipad or they will continue with their effort for low cost versions?

  11. jbond
    February 16, 2012

    I agree completely. Until just recently Apple has had no need to offer a smaller version of the Ipad. When consumers are buying up the Ipad and Ipad 2 at hefty price points, they had no need to go after the cheaper market. This does seem like the optimal time for Apple to introduce a smaller version and try to gain some market share.

  12. t.alex
    February 17, 2012

    Maybe iPadAir, a smaller, slimmer, and lightweight version.

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