Smaller iPad seen boosting Apple's sales to schools, gamers

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  • Reply 61 of 86
    jragostajragosta Posts: 10,473member
    venerable wrote: »

    Let me run a mathematical concept by you.  Assume a margin of 20% (for the sake of argument).  20% of $499 ends up being a bigger n umber than 20% of $299.  If I, Joe Consumer, decide to buy a $299 device over a $499 device, Apple loses money in the grand scheme of things.  They have to sell more of the cheaper device than they could have hoped to sell of the more expensive one.

    Yes, of course. So what's your point?

    The net effect on Apple depends on :

    1. How many of each device they sell
    2. The cost and average selling price of each device (and, therefore, the gross margin)
    3. How many of the more expensive device they would have sold if they didn't introduce the lower priced device (i.e, how much the cheap device cannibalizes customers from the more expensive device).

    As long as the number of new customers picked up exceeds the number of people who switch from the expensive device to the cheap device by a sufficient margin, Apple comes out ahead.

    I would not expect that many people to switch from the $399 iPad 2 or $499 new iPad to a $299 iPad Mini. They're going after different segments of the market. OTOH, if Apple introduces an iPad Mini at $299, I can see it absolutely demolishing Android tablet sales-increasing Apple's volume and profits significantly. If Apple introduces an 7" iPad, that would be an indication that they probably agree with my analysis. If their analysis does not agree, they won't introduce one.
  • Reply 62 of 86
    nhtnht Posts: 4,522member

    Quote:

    Originally Posted by Venerable View Post




    Let me run a mathematical concept by you.  Assume a margin of 20% (for the sake of argument).  20% of $499 ends up being a bigger n umber than 20% of $299.  If I, Joe Consumer, decide to buy a $299 device over a $499 device, Apple loses money in the grand scheme of things.  They have to sell more of the cheaper device than they could have hoped to sell of the more expensive one.



     


    Let me run a mathematical concept by you:  The iPod Touch 8GB is $199.  The Kindle is $199.  The Kindle > iPod Touch 8GB. 


     


    Every Kindle sale that isn't an iPod sale is someone buying into the Amazon ecosystem and not the Apple one.


     


    Very few Kindle sales are lost iPad sales.


     


    Let me run another mathematical concept by you:  The iPod Touch 8GB is $199.  The iPod Touch 8GB + 7" screen is not $299.  I would guess $249 just because it's Apple.


     


    Anyone claiming that Apple can no way no how make a 7" iPod Touch for under $299 and make a profit is someone who shouldn't be running mathematical concepts past anyone else.


     


    An iPod Touch lineup that goes:


     


    8GB 3.5" Single Core A5 iPod Touch $199


    32GB 3.5" Single Core A5 iPod Touch $299


    64GB 3.5" Single Core A5 iPod Touch $399


     


    16GB 7" Single Core A5 iPod Video $249


    16GB 7" Single Core A5 iPod Video + 4G $399


     


    isn't going to hurt Apple's margins.  The 4G iPod Video could cannibalize some iPad 2 sales but is probably higher margin anyway.


     


    It is going to put the final nail in the non-Amazon 7" Android Tablet coffin and put a hurting on the Kindle Fire.


     


    My feeling is that the iPhone/iPod iOS is better than the iPad iOS for a 7" model.  The pixel density is lower than retina but the enlarged iPhone UI will work much better than a scrunched iPad UI.  It'll still look damn good. 


     


    I don't see quadding resolution to 1920x1280 for the device for cost reasons but it's somewhat possible.  All current iPhone apps would still work but it's yet another resolution to support as an app developer for not that much gain over 960x640. 


     


    Perhaps a 5" model would be better than a 7".  More portable, higher pixel density, lower cost.  Perhaps not big enough.

  • Reply 63 of 86
    hmurchisonhmurchison Posts: 12,419member


    Apple would not call it an iPod. 


     


     


    I still have friends that are surprised when I tell them the iPod Touch can play movies and surf the internet and access email.   To consumers 


    "iPod", by and large, means music player.  

  • Reply 64 of 86
    nhtnht Posts: 4,522member

    Quote:

    Originally Posted by hmurchison View Post


    Apple would not call it an iPod. 


     


     


    I still have friends that are surprised when I tell them the iPod Touch can play movies and surf the internet and access email.   To consumers 


    "iPod", by and large, means music player.  



     


    They can call it Fred for all I care.  I still think the iPhone UI will work better than the iPad UI on a 7" form factor.

  • Reply 65 of 86
    bushman4bushman4 Posts: 858member


    Its another option.....Good for those that have a need or use for it. It might also be more cost effective for students etc. Don't expect it to boast the same features as the IPAD3 such as the retina display or amount of ramm etc.

  • Reply 66 of 86
    tzeshantzeshan Posts: 2,351member

    Quote:

    Originally Posted by JBHoule View Post


    >>>>It's far more likely that Amazon will release a 10" Kindle Fire at $299, than Apple releasing a 7" iPad at $299.<<<


     


    I disagree. Think about the iPod line of products. There are four iPod models, ranging in price from $49 to $399, with multiple price points in between. Why do you suppose that Apple introduced lower, and then even lower priced MP3 players? The Nano and Shuffle. To cannibalize their sales of higher end iPods? Of course not.


     


    It does not take the genius of Steve Jobs or other Apple luminaries to understand that owning the higher end market does not mean that the lower end doesn't offer additional opportunities for new customers, profit and growth. Many people who couldn't afford or did not want to spend big bucks for an iPod, opted for a Shuffle or Nano. Think about all the buyers who bought a lowly Shuffle. Let me tell you the story of one iPod Shuffle buyer.


     


    My son Paul, in his early 20s, with limited income, traded up from a portable CD player to an iPod Shuffle. Even the Shuffle was a stretch for his budget in those days. But several years later he chose an iPod Touch, at a pricey $299. That was followed by a MacBook Pro and an iPad and iPhone. You're getting the picture, right? That $59 Schuffle introduced Paul to Apple products, and Apple has been his choice ever since. Did the relatively modest profit on that Shuffle harm Apple's business? Or did it pay large dividends in the years to follow?


     


    Now I'll tell you the story of my son Dave. In his early 30s my frugal son Dave bought an inexpensive MP3 player and thought it was a good player and a good value. I don't recall the brand but I'm certain it has been long dead. He also owned a Tracfone, the absolute low end in mobile phones. Later he bought a Dell laptop and desktop. And later he purchased a Blackberry. When I suggested that he didn't make the best decision on the phone, and showed him my recently acquired iPhone 3GS, he groaned and said he wished he had bought an iPhone too, because it was so much better. Six months later he switched to an iPhone 4. But he had missed out on other wonderful Apple products before hand.


     


    You get the picture. Young adopters of quality brands stick with them. And you can be certain, if Apple introduces a smaller and lower priced iPad, many adopters will become long term or life time Apple customers.


     


    Well, you may be thinking that Steve Jobs strongly derided 7 inch tablets about two years ago, right? Steve also said Apple was NOT interested in the mobile phone business, about a year before the iPhone was introduced. Look for a 7 inch iPad this year. It's a given, sooner more likely than later.

     



    Your observation is not right.  Who are the buyers of Apple iPods, iPhones, iPads, and Macs?  None of the products are the cheapest products available.  In other words,  people bought Apple products not because they are cheap.  Then why should Apple make a cheap 7" iPad to please people that only care if it is cheap?  Then Apple will be trying to please two kinds of consumers.  This is not a winning business strategy.

  • Reply 67 of 86
    hmurchisonhmurchison Posts: 12,419member

    Quote:

    Originally Posted by tzeshan View Post


    Your observation is not right.  Who are the buyers of Apple iPods, iPhones, iPads, and Macs?  None of the products are the cheapest products available.  In other words,  people bought Apple products not because they are cheap.  Then why should Apple make a cheap 7" iPad to please people that only care if it is cheap?  Then Apple will be trying to please two kinds of consumers.  This is not a winning business strategy.



     


    I don't think that's what he's saying.   I think what he's saying is that lowering the bar of entry for Apple products creates a Halo effect.  As the person gets acclimated to Apple's ecosystem they eventually move upscale in their purchases. Apple doesn't do loss leaders so they'll never chase the low end without regard to profit. 


     


    As a content distributor Apple has little risk in trying to expand the overall market for iOS.  They aren't beholden to advertising dollars like Google.  They get 30% from the stores so the more devices buying the more money Apple gets on the backend.    Not even Amazon has as sweet a deal. 

  • Reply 68 of 86
    coojocoojo Posts: 7member


    ill buy one if they put in a sd slot filled my 8gb kindle fire fast

  • Reply 69 of 86
    bikertwinbikertwin Posts: 566member
    A 7" iPad, driving only 1024x768 pixels, can use the iPad 2's processor (rather than the New iPad with its 4 graphics cores). So that lowers costs. And while its screen is twice the physical size of the iPod's 3.5" screen, it's only a relatively small number of pixels larger (1024x768 vs. 960x640), so I imagine it's overall cost is not dramatically higher than the iPod touch's.

    Other than that, an iPad and an iPod touch are identical software-wise, except the iPad uses the iPad version of Universal apps, and the iPod touch uses the iPhone version of apps.

    It seems Apple could easily place the 7" iPad at $299, between the iPod touch at $199 and the iPad 2 at $399.

    Think of the Christmas sales as a gaming, readiing, or school machine if this is released in October!

    It will not seriously eat into New iPad sales because the screen really is too small for serious work, but it's perfect for consumption of text and multimedia and games. I used a Kindle Fire for a few weeks when it first came out, and that size is more portable for reading or gaming on the bus, train, or plane, and easily portable in a backpack or small case. The Kindle Fire's size (and shape--way too wide and not nearly tall enogh in landscape mode) wasn't nearly as good for using a word processor or surfing the web.

    Use a Fire and a 10" iPad and see for yourself. The 7" size is more convent, like a [B]paperback[/B] book, but the 10" size is more serious, no-compromise (other than weight/portability) like a [B]hardcover[/B] book.
  • Reply 70 of 86
    sol77sol77 Posts: 203member

    Quote:

    Originally Posted by PaulMJohnson View Post


    Having just bought my mother a Kindle (just the regular one, not the fire), and had a good look at that, it's really shown me how weak the iPad is as a straight reading device.


     


    I know the Kindle is designed just to be a reader, so you would expect it to be better at that, but I did find myself thinking that for travel purposes, I'll probably be getting one.


     


    If there was an iPad around that size, I'd go for it over the Kindle, as I'd rather pay more for a device that can do more, but in terms of screen size, for book reading, the 6" of the Kindle did seem to be pretty much the sweet spot, for me.



     


    I have both the kindle fire and the ipad2.  I agree with you about size.  I'd much rather read on the kindle.  However, the interface is sluggish and it is easier to navigate a book on an ipad.  I also have to admit that for me (subjectively), reading on the ipad would be perfectly fine if it was half the weight...which won't happen any time soon.  Frankly, if the kindle could do exactly what the ipad could do, I'd never use the ipad.  I've heard others suggest I can be productive on an ipad, but I have yet to experience that.  I've got a macbook air 11in, love it, and have no reason to tote around an extra keyboard in order to use a single window device to work on writing projects.  The Air 11in is only slightly larger than an ipad with a bulky keyboard case, but many times more useful (multiple windows).  If Apple wants me to be productive on an ipad, they need to allow me to open multiple instances of applications so that I can swipe effortlessly between them and perhaps use a gesture to quickly view all of them at once...maybe a squeeze gesture.  Yes, I can can navigate through buttons to see several different documents, but this doesn't simulate a work flow.  I don't want a four finger swipe to toggle between apps...I want a swipe to toggle between multiple documents in the same application.  As it is, the air is only slightly bigger and does everything a desktop can do. 


     


    I think the bottom line is that there might be a market for a smaller iPad...but whether Apple is concerned with that market or even needs that market is anybody's guess.  I've heard the argument that seven inch tablets have not sold well because they are seven inches.  I doubt it.  I think they don't sell well because they suck.  I'd love to see Apple release one of these.  I admittedly have zero knowledge about whether this is feasible or even desirable for Apple.   

  • Reply 71 of 86
    bikertwinbikertwin Posts: 566member
    For everyone saying there's no use case for a 7" iPad, this is how I envision the various use cases:

    [B]iPod touch[/B]
    Small kids. Educational software. Entertainment. [B]Like a pop-up book or Playskool toy.[/B]

    [B]7" iPad[/B]
    Elementary/grammar school kids to junior high kids. Music, video, iBooks, iTunes U (not college classes but rather organized classroom material instead of just educational games), a little bit of more serious apps (Pages, Bento). Also good for senior citizens or anyone who doesn't use computers a lot, for basic web surfing, email, casual reading on the go, etc. Portable gaming. [B]Like a paperback.[/B]

    [B]10" iPad[/B]
    A serious productivity machine for junior and senior high school and college kids, adults, and business. All of the previous uses plus a large screen best suited for serious study (iTunes U, iBooks textbooks) and school/business apps like Pages, Numbers, Bento, company-specific apps, etc. Immersive gaming. [B]Like a hardcover book, textbook, or laptop.[/B]

    Of course, there's always overlap between use cases, but I think these are the main uses.
  • Reply 72 of 86
    jragostajragosta Posts: 10,473member
    hmurchison wrote: »
    I don't think that's what he's saying.   I think what he's saying is that lowering the bar of entry for Apple products creates a Halo effect.  As the person gets acclimated to Apple's ecosystem they eventually move upscale in their purchases. Apple doesn't do loss leaders so they'll never chase the low end without regard to profit. 

    As a content distributor Apple has little risk in trying to expand the overall market for iOS.  They aren't beholden to advertising dollars like Google.  They get 30% from the stores so the more devices buying the more money Apple gets on the backend.    Not even Amazon has as sweet a deal. 

    Actually, they do have a risk. If people buy a $299 iPad Mini instead of a $499 iPad, Apple loses $200 in revenue (and the associated margin) per device.

    I don't believe that the numbers making that decision would be significant and I believe the number of 7" devices sold would more than make up for lost 10" sales, but there's a risk.

    nht wrote: »
    They can call it Fred for all I care.  I still think the iPhone UI will work better than the iPad UI on a 7" form factor.

    ????
    Maybe no one has explained it to you, but the iPhone and iPad use the same UI. The differences are inconsequential.

    nht wrote: »
    Let me run another mathematical concept by you:  The iPod Touch 8GB is $199.  The iPod Touch 8GB + 7" screen is not $299.  I would guess $249 just because it's Apple.

    Anyone claiming that Apple can no way no how make a 7" iPod Touch for under $299 and make a profit is someone who shouldn't be running mathematical concepts past anyone else.

    I guess I missed your evidence. Oh, yeah. That's because there isn't any.

    Start with the old iPad at $399. Please explain in detail how Apple is going to reduce the cost by almost 40% to hit your $249 price point.

    I've already explained how much Apple is likely to be able to save on each component - and nothing comes close to a 40% reduction.

    Of course, you could look at it your way (although starting with the iPod Touch for comparison doesn't make as much sense as starting with a 10" iPad). A 7" iPad would be 4 times the size of the iPod Touch. You really think that only amounts to a 20% increase in price? Again, look at it component by component.
  • Reply 73 of 86
    ssquirrelssquirrel Posts: 1,196member

    Quote:

    Originally Posted by Venerable View Post




    Let me run a mathematical concept by you.  Assume a margin of 20% (for the sake of argument).  20% of $499 ends up being a bigger n umber than 20% of $299.  If I, Joe Consumer, decide to buy a $299 device over a $499 device, Apple loses money in the grand scheme of things.  They have to sell more of the cheaper device than they could have hoped to sell of the more expensive one.



     


    At those hypothetical margins, you would have $83.33 profit on the $500 product and $50 on each of the $300.  So for every million $500 iPad you sell, you would need to sell 1.67M of the cheaper unit.  $300 is much easier for people to drop at once than $500 tho.  This kind of thing is looked at regularly by Apple I'm sure.

  • Reply 74 of 86


    Obviously $199 is too low. Same for $249. IF Apple makes a smaller iPad or larger iPod Touch it will come in at $299. That's a good price point because it comes within $100 of their other models and is only $100 more than a Kindle Fire.


     


    It's ok for Apple to handicap the device somewhat in terms of storage or leaving off cameras if that's what they have to do to retain their margins. Unsatisfied customers can always upgrade. It's not looking to replace the full-size iPad, just filling a gap for an entry-level tablet. And Apple would be smart to secure those customers. It has already been shown that iPhone users are more likely to buy Macs and other Apple products. This is the same case. Get users exposed to the Apple experience and there's no turning back - they'll be customers for life.


     


    Keep in mind that this device could be more of a consumption device and it would work perfectly for that as well as being extremely portable.


     


    As for name, Apple is more likely to go with iPad Mini instead of using iPod Touch because the iPad is so hot these days.


     


    I probably wouldn't get one for myself since I already have a 64GB iPad (3rd gen), but it is something that I'd get for my kids. And it's also something that would appeal to my in-laws at $299.


     


    Bump the iPhone 5 and iPod Touch marginally to 4" displays and you've got an amazing lineup. Besides, Apple will probably continue to sell the 4S anyway. Maybe the 3GS gets dropped, the 4 takes it's spot, the 4S at $99 and the 5 starting at $199 (all subsidized of course).

  • Reply 75 of 86
    malaxmalax Posts: 1,598member

    Quote:

    Originally Posted by jragosta View Post



    Maybe no one has explained it to you, but the iPhone and iPad use the same UI. The differences are inconsequential.


     


    I agree with the rest of your post, but this part is wrong.  From the user's perspective, if you know how to use an iPhone, you can use an iPad, so "it's the same UI" from that perspective, but from an application perspective there are big differences.  Almost every "great app" in the App Store that works on the iPhone and the iPad has a different UI on each device.  We're used to desktop apps that work fine on huge screens and work fine on smaller laptop screens, but part of the genius of the iPhone and iPad was recognizing that small size differences make big UX differences on portable devices.  So yes it does matter whether Apple designates the hypothetical 7.85" device an iPod or iPhone.  Apps are full of "if I'm running on a iPad, so this, otherwise do that" code.

  • Reply 76 of 86
    jragostajragosta Posts: 10,473member
    malax wrote: »
    I agree with the rest of your post, but this part is wrong.  From the user's perspective, if you know how to use an iPhone, you can use an iPad, so "it's the same UI" from that perspective, but from an application perspective there are big differences.  Almost every "great app" in the App Store that works on the iPhone and the iPad has a different UI on each device.  We're used to desktop apps that work fine on huge screens and work fine on smaller laptop screens, but part of the genius of the iPhone and iPad was recognizing that small size differences make big UX differences on portable devices.  So yes it does matter whether Apple designates the hypothetical 7.85" device an iPod or iPhone.  Apps are full of "if I'm running on a iPad, so this, otherwise do that" code.

    That's silly. There are slight differences in the implementation on the iPhone and iPad, but it's not a different UI.

    Almost everything at the OS level works the same on both devices. In fact, I can't think of any differences (other than there being more icons per screen on the iPad which is trivial). From a UI perspective, they both do the same thing and work the same way.

    The fact that an application developer might make differences between the iPad and iPhone apps is not a UI difference.
  • Reply 77 of 86
    malaxmalax Posts: 1,598member

    Quote:

    Originally Posted by jragosta View Post





    That's silly. There are slight differences in the implementation on the iPhone and iPad, but it's not a different UI.

    Almost everything at the OS level works the same on both devices. In fact, I can't think of any differences (other than there being more icons per screen on the iPad which is trivial). From a UI perspective, they both do the same thing and work the same way.

    The fact that an application developer might make differences between the iPad and iPhone apps is not a UI difference.


     


    Semantics.


     


    The important question is "does it matter if some tweener device is a big iPod touch or a small iPad?"


     


    The answer is absolutely.  There are iPhone/iPod touch apps and there are iPad apps (and there are "universal" apps that bundle both apps into a single package).  The best applications have a different interfaces/work differently on each device.  So while the OS UI is almost exactly the same, who cares.  No one buys an iPad to scroll back and forth between screens of icons.  It's the apps that matter, and the apps most definitely have different UIs.  The UI elements are the same, but how they are assembled into an user interface depends on the device.


     


    I'm just saying that if you could take your iPhone and tell it "act like an iPad" (or vice versa), you would find that you wouldn't be very happy with many of your core apps.  So would matter how Apple set the "swtich" on a tweener device.  Does it act like an "easy reader" version of the iPhone with everything just bigger, or does it act like an iPad with everything a little bit more cramped.  It matters.

  • Reply 78 of 86
    ssquirrelssquirrel Posts: 1,196member


    If it's using an iPad resolution, my guess is it will act as an iPad for how universal apps act.  Not to mention the iPod brand is less effective (witness the dragging sales figures for the iPod line) and the reasons to brand it an iPod are definitely there.  Sunrizer is a tabbed interface on an iPhone due to the drastically smaller screen, but on an iPad they have coded its version to have everything on one screen (mostly).  These are app UI differences that are determined by which device you are on, but they are not OS UI differences.  The UI for iPad and iPhone are the exact same.  How apps function in them can be different, but that is at the app level.  I test software for a living, I have to keep that kind of thing in mind when I test. :)

  • Reply 79 of 86
    malaxmalax Posts: 1,598member


    While I agree with you and I do think disagreements are just about semantics (what someone means when they say "the UI is different"), the iPad and iPhone UI are not exactly the same, just very close.  Apple sweats the details.  The icons on the iPad are a larger (you have to submit 2 sets of icons for a universal app, a smaller set for the iPhone and a larger set for the iPad (plus more for the App Store, but that doesn't count).  The iPad OS UI works in all orientations; the iPhone OS UI is almost exclusively portrait only.  Double tap the home button and swipe from left to right.  On the iPhone you get 5 buttons and can swipe again to get to volume control.  On the iPad those are combined.  Obviously these are all trivial differences, but even at the OS level there are differences.


     


    As I've said elsewhere, Apple has basically 4 choices:


    1. don't offer a tweener device


    2. make the tweener act like an iPhone/iPod touch (not very appealling for a number of reasons)


    3. make the tweener act like an iPad


    4. introduce a third "idiom" to the mix (that's what Apple calls this in the code; for example the check is UI_USER_INTERFACE_IDIOM() == UIUserInterfaceIdiomPad)


     


    While option 3 seems like the "obvious" choice, I just don't think that's Apple's way of working.  Shrinking everything 25% would negatively effect usability (not for every app or every aspect of each app of course, but in non-trivial ways).  The "right" approach would be to announce a new idiom and give developers a few months to update their apps.  Maybe they'll do that at the WWDC.  If they don't, then my money is on option 1 for the time being.

  • Reply 80 of 86
    relicrelic Posts: 4,735member

    Quote:

    Originally Posted by hmurchison View Post


    Apple would not call it an iPod. 


     


     


    I still have friends that are surprised when I tell them the iPod Touch can play movies and surf the internet and access email.   To consumers 


    "iPod", by and large, means music player.  



    Really, most devices that cost under 100 bucks can now do that.

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