Apple released the 7.9-inch iPad Mini today, its first foray into the mini-tablet market. Some have questioned the move, arguing Apple risks disrupting its more profitable full-size iPads. Conventional wisdom may hold that few consumers would own a full-size tablet and a mini-tablet. But this analysis misses a key point. Although tablets are grouped as mobile devices, their use is still overwhelmingly confined to the home. Michael Collins, CEO of mobile ad agency Joule, recently told us, “If you look at tablets, 80 per cent of the use is in the home. A very high [percentage] of use is for long-term content consumption.” Tablet use, he said, tends to be “stationary.”
Several studies have likewise found that tablet use largely stays in the home. However, that will change with the advent of the mini-tablet, which fits in the hand and is a truly go-everywhere mobile device.
As we discuss in our tablet market forecast, mini-tablets will be a major driver of growth in the tablet market because they have disrupted traditional pure-play e-readers, which are the same size as mini-tablets. Simply put, mini-tablets offer more bang for your buck. The cheapest e-ink Kindle costs $69. The premium Kindle Paperwhite is at $119 (the Paperwhite 3G costs $179). Meanwhile, the least expensive Kindle Fire is at $159. In other words, a $40 to $90 price premium buys the Kindle Fire’s colour screen, movies, games, and a deeper app selection. That’s a no-brainer for most consumers. All those Amazon Kindles and Barnes & Noble Nooks you see on planes, trains, and buses? They’re soon going to be Kindle Fires, Nook Tablets, Google Nexus 7s, and yes, iPad Minis.
This gets to the heart of the matter. Mini-tablets are clearly part of the tablet product family, but they are their own distinct product line. Not everyone will own a full-sized tablet in five years, but the majority of Americans will own either a full-sized tablet or a mini-tablet. For Apple to cede the burgeoning mini-tablet market to Amazon and Google would have been foolish. Instead, they are attacking it in their own unique, Apple way: own the high-end of the product line and link it with the iOS universe.
The big question now is: Will consumers bite on the 16GB iPad Mini at $329 while competitors are offering comparable products starting at $159 and $199?
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