Featured StoryWhile it won't rake in iPhone-style profits that could drive Apple Inc. (Nasdaq: AAPL) stock to new heights, a smaller iPad - the iPad Mini - is a smart and necessary strategic move.
The Apple iPad Mini does not yet exist, but recent reports say its arrival is imminent.
According to Fortune, invitations to an Oct. 17 iPad Mini introduction event are expected to go out Oct. 10, with the product likely available to buy in early November.
That was buttressed by a The Wall Street Journal story two days later that reported Asian suppliers had "started mass production" of an iPad Mini with a 7.85-inch screen.
Instead of celebrating a fresh source of Apple profit, however, some on Wall Street aren't thrilled by a smaller iPad.
They're worried that iPad Mini will hurt AAPL's margins, which have risen steadily along with sales of the high-margin iPhone.
But this theory just shows how The Street is missing the big picture.
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Apple iPad mini
How the Apple (Nasdaq: AAPL) iPad Mini Will Crush Tablet Rivals
If Apple Inc. (Nasdaq: AAPL) does unveil an iPad Mini this fall - and fresh reports from both Bloomberg News and The Wall Street Journal indicate it will - the new device could help Apple lock up the tablet market for years.
The iPad Mini, as tech pundits are calling it, could debut as early as October. It's thought to have a 7.85-inch screen, significantly smaller than the 9.7-inch display of the three iPad models released so far.
Such a product would compete directly with Amazon.com's (Nasdaq: AMZN) Kindle Fire as well as the just-announced Nexus 7 from Google Inc. (Nasdaq: GOOG). Both sport 7-inch screens and a $199 price tag aimed at buyers unwilling to pay $499 or more for a new iPad (or $399 for an older iPad 2).
"It would be the competitors' worst nightmare," Shaw Wu, an analyst at Sterne Agee & Leach Inc., told Bloomberg. "The ball is in Apple's court."
There was no word on what the iPad Mini might cost, but in a note yesterday (Thursday) Topeka Capital analyst Brian White estimated a range of $250-$300.
"That would lure certain consumers away from these competitors with an overall better experience that includes a much more robust ecosystem," White said.
Apple's desire for generous profit margins will keep it from pricing an iPad Mini at $199. Both the Amazon Kindle and Nexus 7 lose money at $199.
With its impressive ecosystem, Apple can get away with charging more for a similar product. That ecosystem, built upon the iOS platform that runs all of the Cupertino, CA company's mobile devices, includes the iCloud remote storage service as well as 225,000 apps designed just for the iPad.
"This isn't like the old days, when it cost thousands of dollars more to buy an Apple product," Wu said. "Fifty or a hundred bucks wouldn't be enough to make someone switch."
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