Mikey Campbell
Apple's iPad mini is predicted to be the source of much strife for competing tablet makers during the upcoming holiday shopping season, and one analyst believes the 7.9-inch device will cut into sales of newly-released Windows 8 products.
As the mini begins its world tour launch, with sales already started in New Zealand, many have offered their thoughts on how the device will perform in the mid-size tablet market currently dominated by Android-based products. However, Sterne Agee analyst Shaw Wu said in a note to investors that the speculation "misses the point," explaining that the smaller iPad's real competition is against PCs and Windows.
"We continue to believe iPad mini is the competition's worst nightmare and will likely slow down adoption of competitor tablets," Wu wrote. "In particular, we believe this could end up being a very tough holiday season for Windows 8."
Since Apple debuted the mini at a special event at the end of October, pundits have been comparing the tablet against products like Google's Nexus 7 and Amazon's Kindle Fire HD, devices they believe to be its nearest competition. Contrasting these views, Wu sees Apple's smallest iPad as having a greater impact on PC vendors, as the unit's $329 price of entry undercuts many of the new and upcoming Windows 8 products.
As an example, the analyst pointed to Microsoft's own $599 Surface RT, which he said was "arguably overpriced."
Regarding the iPad mini's price point, which some predicted would be in the $249 to $299 range, Wu believes the concerns are "overdone," and likens the product's positioning to the iPod mini and iPod nano.
"This controversy reminds us of what happened with iPod mini and iPod nano," Wu wrote. "Both predecessors were criticized as being overpriced but went on to do much better than expected. The key reason being high quality at a reasonable price and we see something similar here."
Apple's iPad mini is set to go on sale in 20 countries on Nov. 2 at 8 a.m. local time, though brick-and-mortar Apple Stores and resellers may be the only place to purchase one, as preorders for all launch models sold out within hours of going live.
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64 Comments
No, their "worst nightmare" would have been if Apple had been able to price the low-end model at $199. Then competitors would be run right out of business. $329 leaves room for them in the market.
Nice to compare the price of the 7.9" 16GB mini to the 32GB Surface that includes the keyboard cover.
When the reviews of the Surface are out along with reviews of the iPad Mini, you can bet that the big names will make the comparisons. I'm eager to read what they say. The distribution of the reviews will be the key to the success or failure of the Surface. Sure the few Microsoft stores and retailers will push the expensive tablets, but once people hear about how well or poorly it works for the money, Microsoft will have the answer to the question "Will it sell?".
[quote name="ktappe" url="/t/153974/ipad-mini-is-windows-8-hardware-makers-worst-nightmare-analyst-says#post_2225157"]No, their "worst nightmare" would have been if Apple had been able to price the low-end model at $199. Then competitors would be run right out of business. $329 leaves room for them in the market. [/quote] Which is just fine. If Apples goal was to eliminate competitors they could, but thankfully it isn't.
No, their "worst nightmare" would have been if Apple had been able to price the low-end model at $199. Then competitors would be run right out of business. $329 leaves room for them in the market.
Exactly what Apple wants. Apple wants a bunch of manufacturers squabbling over the crumbs at the low end of the market in a race to the bottom. While they might be able to move a lot of worthless units, it won't be enough to fund the development of powerful next-generation systems and they won't attract the kind of customers who spend $100 or more a month on software, services and media - which is where Apple makes big money and expands its ecosystem.
Remember the home computer wars of the early '80s, when Commodore, TI, Atari, Coleco and Tandy got sucked into a raging price war at the low end of the market. They pretty much all outsold Apple, ended up not making any money and their el-cheapo userbase pirated software instead of buying it, so only the biggest seller (Commodore) had anything in the way of a platform. Even then, Commodore was pretty much wiped out by the arrival of the clones, their profit margins were so low and their platform incapable of keeping up with IBM's. Only Apple survived.
This is gonna be the exact same deal. You'll see Samsung, Amazon, a bunch of Chinese Android craplets and whatever Surface junk Microsoft pumps out all competing with one another on price and spec sheets. Margins will collapse, they'll be giving their cruddy tablets away, their cheapskate users won't buy any software or services and finally Apple will release some disruptive device - again - that makes them all obsolete, anyhow.
History doesn't repeat, but it does rhyme.