With iPad Mini Apple Sees Bigger Picture

Apple's unveiling of the new iPads might have upset some recent customers of the third-generation iPad because the latest version will have a faster processor, the Lighting connector, and other new goodies. Some also accuse Apple of flooding the market with essentially the same product. It also didn't impress the stock market. Apple shares were down at the end of business day.

Yet the Mini is only two-plus years and a couple of inches removed from igniting the revolution in the way we take information. Newsweek in fact discontinued the print version of its magazine just this past week as part of the cascading effects started by the iPad.

The point is Apple now has 14 tablets--not including the iPod Touch--ranging from $329 to $829, to lure customer into stores. And since the "wow" element of introducing a new tablet has largely vanished and an announcement on its own won't necessarily bring customers into stores, Apple can leverage its variety to match a tablet to a customer's needs. And of course do a bit of upselling as well.

When we first heard rumors of an iPad Mini many months ago, I thought it would be perfect as an at-home gadget to manage household services such as temperature, lighting, music, and Siri integration with Apple TV. I still think that's true. But after finally seeing it, I'm thinking the at-home gadget role might be better filled by the larger iPad, with the Mini taking its place for the daily commute. A pound less at 0.68 pounds, the Mini is small and light enough to hold in one hand, compared to 1.46 pounds for the full-size iPad, and is only 7.2 mm thick, versus 9.4 mm.

Although many anticipated a $199 price tag to directly compete with Nexus 7 and Kindle Fire, the starting price of $329 for the 16 GB Wi-Fi model of the Mini says--right or wrong--that Apple sees only itself as the competition, so it squeezed the Mini into its pricing structure.

Finally, the speculation about one iPad cannibalizing another is meaningless when all the tablets have a high margin. If the Kindle Fire is breaking even at $199 as Jeff Bezos told the BBC, then it's not too hard to estimate what Apple earns for the Mini.