Thoughts from Aloft

We all know that Apple has created many of the groundbreaking devices of this young century. The iPhone, iPad, and iPod Touch have surely exceeded even the wildest expectations about their use, and popularity. In around two and a half years, the iPad has successfully created a new technology sector very nearly from scratch, and continued to dominate it.

But a parallel development that appeared on scene before the iPad has gradually merged with the tablet sector. This is the e-reader sector: Amazon released the wildly popular Kindle e-book reader, again creating a new industry virtually from scratch. Over time, the line expanded to include the Fire, a seven-inch tablet device that retailed for much less than the iPad, which is now in its third generation. Suddenly, Apple’s tablet had its most serious competition yet.

One can easily argue that the Kindle Fire has much less capability, sleekness, “cool factor,” and other attributes than the iPad. However, there is an enormous part of the population who would not spend $500 for an iPad. But, they will spend $199 for the entry level Kindle Fire HD. Amazon has recently turned up the heat even more, announcing the Kindle Fire HD 8.9, with a starting price of $299. That price buys you a tablet with 16 gigabytes of data storage, an HD display, Dolby speakers, and Wi-Fi claimed to be faster than the latest iPad. $500 will buy a 32GB version of the tablet, with a very competitively priced 4G data plan from AT&T. The same will get you the entry-level iPad: 16GB and Wi-Fi only. The 32GB, 4G iPad, on the other hand, costs $729.

So where does this leave Apple? In the year since the passing of Steve Jobs, the company has continued to release products, including a major refresh to the iPhone and iPod lines, and the introduction of retina displays on certain high-end models in the notebook lineup. However, there have been some notable stumbles, such as the recent launch of the newest iOS software, version 6, which included the results of a divorce of sorts with Google. The Maps application Apple created was received so poorly that the notoriously silent company issued a public apology from Tim Cook, the new CEO and Jobs’ replacement. With these recent events, the company finds themselves midway through October, probably still smarting from the Maps debacle, with their biggest competitor preparing to release markedly cheaper devices with newly enhanced functionality. One only needs to look ahead a page on their calendar to see the usual beginning of the holiday shopping season. And one wonders how many Kindle boxes will sit shining beneath the tree this year.

The big question: what will the response be? On the tablet chessboard, Amazon has made their move, and the world of Apple watchers awaits the next move. For months, reports have circulated regarding the possibility of a smaller iPad, growing by the week in frequency. These dispatches from the fringes of technology news circles suggest production is underway in a Brazilian factory, and the usual collection of “leaked” images offers a wide array of design possibilities.

Analyzing prices of currently available Apple iPod Touch and iPad models leads to me to make an educated guess at the Mini’s price point…the 64GB iPod Touch sells for $399, and the previous iPad model, the iPad 2, also sells for $399. I suspect the Mini, if and when released, will go for that price and replace the iPad 2 in the lineup. However, this is still notably higher than the Kindle price points…the 7-inch Fire is $199; the 8.9-inch; $299.

But.

The newest iPod Touch starts at $299 for a 32GB model. It would be a bit odd to offer a tablet product with what would likely be half the capacity for the same money. In all honesty, it is quite tricky to try placing the Mini in the pricing lineup. It has been suggested numerous times that Amazon does not break even, and, in fact, loses money on each Fire sold. But, in a fashion similar to Apple and iTunes, most content for the devices must be purchased from Amazon’s online stores, including music, movies, TV shows, and books. The sales of these items then cover the money lost on the device itself.

Unless Apple follows this plan, the sales will likely be driven by the factor that, for just a bit more money, you can own an iPad rather than an Amazon device. In addition, they must be careful not to try to meet the price point at the expense of quality and performance. .

There will be an announcement from Apple on October 23. Until then, we can all only guess at their plans. I’m optimistic that they will again create a groundbreaking and revolutionary device. How will it perform, and what will it cost?.

Time will tell..

I’d love to hear your thoughts on a potential Mini iPad…feel free to leave them in the comments, or tweet me @mdgjedde

~ by Matthew Gjedde on October 17, 2012.

Posted in Technology