Edible Apple

Steve Jobs famously said that tablets with 7-inch screens stood no shot in the marketplace and would effectively be dead on arrival. Customers, Steve Jobs claimed, wanted their tablets a bit bigger – and so far it’s hard to argue as a plethora of smaller screened tablets have failed to gain even a modicum of traction in the marketplace. And those tablets that sport equal or even bigger screens that the iPad are also struggling to amass sales figures worth bragging about.

Amazon a few weeks ago introduced the Kindle Fire, a 7-inch Android based tablet with an aggressive $199 price point. While it remains to be seen if the Kindle Fire will pose any real threat to Apple, Amazon does have a leg up on other Android tablets insofar that it has a seamless and trusted marketplace where users can download a bevy of media content that may not rival iTunes, but is still leaps and bounds ahead of anything other tablets currently offer.

All that said, the Taiwan-based United Daily News is reporting that Apple recently received samples of an iPad with a 7.85 inch screen that sports the same 1024×768 resolution as the iPad. This device, dubbed the iPad mini, will reportedly go on sale early next year.

So is there any truth to this rumor?

An iPad mini, to compete with the Kindle Fire, would have to be priced at iPod Touch levels. Is this something Apple is willing to do? Further, what about Jobs’ claim that people don’t want 7-inch devices?

To that end, analyst Brian White of Ticonderoga Securities claims that the “mini” moniker is actually a reference to a lower-cost iPad, albeit with the same 9.7-inch screen Apple currently employs.

Regarding Apple, our research is pointing to the unveiling of a lower priced iPad in the first few months of 2012 that is aimed at expanding the company’s market potential by tapping into a more price sensitive consumer segment. Essentially, this “iPad mini” will also fend off the recently announced Amazon Kindle Fire that addresses the low-end tablet market with a $199 price tag but could lead to bigger tablet ambitions from the online retailer in the future. The “mini” refers to a reduced price point of this iPad and not necessarily the size of the device. We believe this lower priced iPad could be priced in the mid-to-high-$200 range.

Apple will likely release an iPad 3 with a Retina Display this April, and recent reports suggest that production on the upcoming device has already commenced. So perhaps Apple will apply its iPhone 4/4S strategy to its next iPad refresh wherein it will release a new iPad 3 alongside a cheaper version of the older-generation iPad 2, perhaps with less storage.

So just as one can now purchase an 8GB iPhone 4 for $99, perhaps a 16GB iPad 2 for $299 isn’t that far off.