iPad Mini Reports Swirl, But Does it Make Sense for Apple?

As Microsoft and Google have enter the tablet market, reports suggest Apple will release a new, smaller iPad this year

Reports of a new iPad, sized to compete with Amazon’s Kindle Fire and Google’s Nexus, have set the internet ablaze, as tech writers debate the likelihood and merit of such a device.

Both the Wall Street Journal and Bloomberg say Apple is working on a seven-inch tablet, dubbed by some the iPad Mini. Though similar speculation has been bandied about before, the two reports claim Apple would begin production on or even release the device before the end of the year.

True, Apple CEO Steve Jobs publicly decried seven-inch tablets, believing that apps and video did not play as well on the smaller screen. But Apple has previously denounced products it went on to make — like smartphones — and the tablet market is heating up with the entrance of devices from Apple rivals Microsoft and Google.

While Microsoft's Surface is priced and sized to compete with the current iPad, Google’s seven-inch Nexus enters a lower-end market currently dominated by the Kindle Fire.

Apple’s move would position it to take a run at both, but the question remains: Does that make sense for the world's most profitable technology company?

Apple stock is up 2 percent on Thursday, but tech writers and bloggers have had mixed reactions to reports of an iPad Mini.

There are those who believe, given Apple’s dominance in the greater tablet market, that it should not squander this opportunity to overwhelm its competitors in the growing market for smaller tablets.

“Given the antagonistic hostility between Apple and the multi-headed hydra which constitutes the Android army, it seems unlikely Cupertino wants to give its enemies free reign in the space,” Jonny Evans wrote at ComputerWorld.

Others argue that people already like the iPad more than the other tablets, but that some can’t afford to spend $500 or $600 on the device.

They ask: If Apple can introduce a seven-inch tablet, competitive with Google and Amazon in terms of price, why not do it?

A seven-inch could also serve as a gateway to the 10-inch iPad. Users who bought a smaller and cheaper device might decide they want the full experience.

“If Apple doesn’t offer an iPad Mini, it may break the cycle and surrender this middle market to the competition,” Tony Bradley wrote at PCWorld, for example. 

“Once they transition to another platform, they’ll be invested in that ecosystem and it will be that much harder to win them back if they choose to buy a larger tablet in the future.”Yet price is also a reason some think Apple should resist the temptation to launch a new tablet.

Amazon has built a business on offering lower prices than its competitors, and it may initiate a pricing war in the tablet market. Now that Google has priced the Nexus at $199 – the cost of a Kindle Fire – Amazon may push the prices for its own devices even lower.

Apple markets its devices as unique, enabling it to charge higher prices and ensure high profit margins. Can you be high-end and affordable at the same time?

As Adrian Kingsley-Hughes writes at ZDNet, “All Apple has to do is sit back, watch while Amazon and Google simultaneously annihilates the competition and drives the price of Android tablets into the ground, and keep making 9.7-inch iPads and selling them at a healthy 30 percent profit margin.”

There’s also the question of whether a smaller iPad would further fragment the market. In order to make a seven-inch tablet price competitive with Google or Amazon, Apple would have to make a few sacrifices. Bloomberg says that it could not have a retina display screen of the latest iPad.  

Apple already has the iPod Touch, the iPhone and the iPad to go with its suite of computers, prompting some to ask: What's the point of an iPad mini?

Sill, Apple may feel it has no choice. It might prefer not to make a seven-inch tablet, but it may feel foolish to surrender that market to its competitors, Google in particular.

As much as Jobs disliked seven-inch tablets, one has to think he hated Google more.