Market Overview

Why Apple Will Never Release a Mini-iPad

Yet another report stemming from “sources” in the “supply chain” claims that Apple (NASDAQ: AAPL) will release a smaller iPad.

The latest report comes from DigiTimes (via Business Insider) and indicates that the miniature tablet will come in at 7.85 inches and arrive before the end of Q4 2012.

Considering how many iPod variations there are, you might not think that a mini-iPad is too far off. But Apple is not a fan of small tablets. Last year, Steve Jobs openly bashed the competition, referring to seven-inch iPad competitors as being “dead on arrival.”

As a corporation looking to profit, Apple could feasibly change its mind and go in a different direction under the guidance of its new CEO, Tim Cook. But that is very, very unlikely.

First and foremost, sales of seven-inch tablets have not been good. While Google (NASDAQ: GOOG) has proven to be a worthy competitor in the smartphone department, it has yet to bring Android to a single tablet that can compete with the iPad.

Part of Google's success with smartphones may be tied to the simple fact that, up until this year, not everyone could buy an iPhone. But anyone can buy an iPad (the leading tablet) or an iPod Touch (the leading MP3 player/mobile video player).

Up until this winter, only AT&T (NYSE: T) users could get an iPhone, leaving Verizon (NYSE: VZ) users without an Apple option. They could choose to switch carriers if they'd like, but for the most part Verizon users chose to pick another phone. The same was true for consumers who use Sprint (NYSE: S), which did not get the iPhone until the iPhone 4S arrived. While the exclusive deal with AT&T did not prevent the iPhone from becoming a smash hit, one could argue that it has limited the phone's potential while simultaneously increasing the success of Android.

Under that belief, you might expect Android to lose its luster now that virtually anyone can get an iPhone. But Android has accumulated too many fans for that to occur. It is now a formidable opponent to the iPhone, and it's not going anywhere.

Android did not have that luxury with the tablet market. First and foremost, Apple was the first major company to release a tablet. Second, the first iPad (and, for the most, the iPad 2) could be described as a giant iPad Touch, the most loved MP3 player in the world. Third, since anyone can buy an iPad (it's not like we needed AT&T's overpriced 3G service – Wi-Fi will suffice), there was no reason for consumers to look elsewhere. Fourth, the iPad is still the most intuitive tablet available. Fifth, the iPad is the most cost-effective tablet; while you can pay less for an Amazon (NASDAQ: AMZN) Kindle Fire, you will receive a lower-quality tablet.

Since the DigiTimes report made its debut, the Internet has been buzzing with rumors that suggest a seven-inch iPad is on its way. Perform a search for “7-inch iPad” and you will get a whole host of stories from MacRumors, PC Mag, and numerous others. Cult of Mac has an amusing mockup of what a seven-inch iPad would look like compared to the existing 9.7-inch model.

If you really, really want a small tablet, don't wait around for Apple to make your dreams come true. While it is wholly possible that one of its competitors will finally release a great seven-inch device, don't expect Apple to follow suit. More than likely, the Mac maker will continue to focus on improving the current (enormously profitable) iPad format.

Follow me @LouisBedigian


ACTION ITEMS:

Bullish:

These rumors shouldn't have any impact on Apple's bottom line (or its share price) whatsoever. However, it could positively impact:

  • Amazon, which is gaining a ton of free press because of today's mini-iPad rumor.
  • Barnes & Noble (NYSE: BKS), which released one of the cheaper tablets available, the Nook Tablet.
  • Google, whose Android platform is the only (current) source of mobile OS competition for the iPad.
  • Microsoft (NASDAQ: MSFT), which is developing Windows 8 – the company's main, non-mobile platform – with tablets in mind.
Bearish:

If Apple did release a seven-inch tablet, who might be negatively impacted by this venture?:

  • As a tablet-ready OS, Windows 8 needs to be successful not only on the PC but on tablets as well. If Apple releases a seven-inch iPad, it will provide consumers with one less reason to investigate the competition.
  • Android would be screwed in the tablet market.
  • Hewlett-Packard (NYSE: HPQ) has high hopes for WebOS, but it will only be as successful as the number of consumers that support it.
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

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