How The iPad Went From Monopoly To Minority Within A Year

When we first got word over the summer about a smaller and less expensive iPad, it was a foregone conclusion that the miniature iPad would be a smash hit for Apple this fall. Apple looked invincible and pundits had proclaimed the tablet market to be the exclusive domain of Apple. But just a few short months later the competitive environment has changed drastically and the iPad is rapidly approaching a minority market share. With robust competition from Google and Amazon and soon Windows 8, it's no longer a certainty that the iPad Mini can halt the rapidly declining market share of the iPad.

UPDATE: The Nook HD 7" actually has the highest resolution of any 7" tablet on the market with 1440x900 pixels. The Nook HD also has a MicroSD expansion slot which allows users to add inexpensive flash storage. The Nexus 7, Kindle Fire, and iPads do not have MicroSD slots.

We know that the probable specification of the iPad Mini is a tablet with a 7.85", standard 1024-by-768-pixel XGA resolution screen. There are some concerns about the 4 x 3 aspect ratio because it might make the iPad Mini too wide to comfortably hold in one hand and too large to fit in a pocket, which popular 7-inch Android tablets have no trouble fitting. The iPad Mini's thinner frame might be enough to offset the problem but it remains to be seen.

The third-generation 9.7-inch iPad has a distinct advantage over other tablets with its Retina display with leading 2048-pixel-by-1536-pixel resolution. But the iPad Mini finds itself outgunned in an era of HD and full HD resolution tablets. All the new 7-inch Android tablets, such as the Asus Nexus 7, Kindle Fire HD, and the Nook HD, have HD resolution of 1280 pixels by 720 pixels (or better - see update above), which is great for native resolution HD content. The Kindle Fire 8.9" HD will have 1920-by-1200-pixel resolution, which is higher than full HD, and widescreen videos will look nearly as large as they do on the full-size 9.7-inch iPad. The iPad Mini will have to scale movies and videos down to a letterboxed 7.2-inch screen with a 1024-pixel-by-576-pixel resolution, which is substantially worse than the competition.

Compounding the problems for the iPad Mini is the question of price. Priced at $199, Apple would have to operate at razor-thin margins and risk cannibalizing higher price devices. Even at a starting price of $249, the value of the iPad Mini is poor compared to other HD resolution $199 tablets. At $299, it's the same price as the full-HD 8.9-inch Kindle Fire HD and even exceeds the $269 Nook HD+ 9-inch. There's also the question of how Apple would justify a $299 4-inch iPod Touch. If Apple attempts a $349 starting price, the iPad Mini is probably a dud unless it has a Retina display. At 52% market share and slipping, Apple is no longer the only player in town and it will have to compete on price at some level.

If Apple had quadrupled the resolution of the fourth-generation iPod Touch from 960 by 640 pixels to 1920 by 1280 pixels, which is identical to the Nook HD+ 9-inch, then it probably would have had a winner at $349. But if the iPad Mini arrives with a non-Retina 1024-pixel-by-768-pixel screen as predicted, then Apple miscalculated badly. It will have to hope that its brand justifies $249 on an iPad Mini with an inferior display and hope that it can slow its market share decline.