For and Against A Smaller Tablet

Rumours continue to abound about a smaller form-factor iPad. The New York Times claims that a 7.85″ iPad will arrive this fall, priced below $499. Reports from other media outlets have said the same thing. But this isn’t news. Ever since the arrival of the iPad, various analysts and media outlets have claimed to hold knowledge about a forthcoming smaller iPad. One of the lone holdouts in this area is All Things D, who generally seem to have a good handle on what goes on in the Silicon Valley. That isn’t to say a smaller tablet is a bad idea. I know I wouldn’t mind one, but I’m not sitting here thinking my current iPad is so much of boat anchor that it is barely portable.

A smaller iPad, like other smaller tablets, will be facing a considerable challenge, at least in the immediate term. Current sales figures on the Android side are mixed, and really don’t indicate strongly how much real demand there may or may not be for a smaller tablet.

Kindle Fire and Nexus 7

Proponents of a smaller iPad point to Kindle Fire sales, and how they finally gave Android a bright spot in the tablet market. While no hard numbers are out yet, the Nexus 7 looks like another potentially promising device. There are some that believe a successful Nexus 7 would point to strong demand for a smaller tablet.

But the Kindle Fire data needs to be tempered a bit. Yes, the device had an outstanding holiday sales rush, in part because it was holiday shopping time, so any novel should do well. But it was also novel, and even without the Thanksgiving and Christmas rush, it probably would have sold well. The problem, though, is that those outsized sales volumes have not been sustained. Indications I’ve seen say that it has fallen to less than half of the holiday sales peak, and those numbers don’t appear to be trending upward.

The Nexus 7 sales need to also include a caveat: consider that a significant number of Android app developers are likely to be buying one for their own use (I’m getting one for myself). That will help the device in initial sales, but it will take a few months, possibly as long as 2 quarters, before we know if the sales numbers can be sustained or not. Early excitement does not necessarily indicate real demand or continued sales success.

Samsung Tablet Sales Moribund Until…

Another lesson is Samsung and the Galaxy Tabs. Their first unit, the 7″ version, didn’t sell all that well. It did “okay”, and certainly better than RIM’s disastrous Playbook, but it wasn’t a serious challenger to the iPad by any stretch of the imagination. But when the first 10″ models arrived, sales for Galaxy Tabs increased. You’ll notice that Apple has largely focused on the 10″ Galaxy Tabs in their various IP lawsuits, and have largely ignored its smaller sibling. The larger model is what helped propel Android ahead in tablet sales, as much as the excitement of the Kindle Fire.

There is little point in dwelling on the Playbook. One can question whether it’s lack of success was due to the 7″ form-factor, or whether it was due to other, more fundamental problems with the platform and the device. It isn’t a ringing endorsement for the smaller size, but it has enough other problems that size may not have been the overriding problem.

Preemptive Strike Might Make Sense

For now, barring sustained sales for the Nexus 7 and a resurgence of the Kindle Fire, the 7″ tablet market is uncertain and appears unstable. However, it may not remain that way forever. Like in MP3 players, the devices will start to reach an audience that will want a broader selection of product that is currently available. Unlike the smartphone market, the tablet market in its current form is relatively new, and we are still seeing consumers that end more toward being early adopters than mainstream consumers that are concerned about selection and price, more than the technology itself. But a day is coming when those consumers will enter the picture.

Consider that Apple wasn’t exactly jumping up and down to enter the Flash-memory based MP3 player market. They didn’t jump in right away, waiting until the middle of the 3rd generation of the iPod, 2 years after the platform first appeared. There was even some doubt as to whether Apple would bother, given how dominant the harddrive based iPods were in the space. But Apple went there anyway, if only to take that market away from competitors as way to chip away at iPod dominance.

A smaller iPad might accomplish the same thing. Granted, it may not have the profit margins that Apple is seeing on the current iPad. But it could ensure that Apple isn’t late to the party if the segment should wake up. Just because sales of 7″ models are currently small doesn’t mean it will stay that way. The Flash-memory based iPods simply cemented the platform’s leadership position, and the Nano and Touch have been massive volume sellers for Apple, volume that very likely would not have gone to the classic iPod (and in the case of the Touch, most certainly wouldn’t have gone there. The devices are so different that it is odd they are both called iPods).

But Why Release In October?

So, lets assume for the moment that Apple is intent on bringing out a 7″ iPad. Why would they announce it separately from the current iPad, likely to be refreshed next spring? While it would seem unusual to split the iPad launches, there could be some reasons behind it. One, it could be done in conjunction with the release of the next iPhone. That would see just how strong the demand really is: can it compete with the hype and excitement of a new iPhone. Apple seems to do this when they want to play down a new device: they announce it alongside something bigger and more exciting. Look at the AppleTV announcements: they come almost as an afterthought when Apple brings out something bigger and presumably more compelling.

An October release would also allow developers time to get apps ready in time for Christmas, although it would mean largely missing the back-to-school sales season. How important that is depends on how a smaller iPad handles apps: will it even run the current iPad apps (given that the controls would get pretty tiny) or would it only allow iPhone apps to start until current iPad apps are adjusted to include support for the smaller screen? That is a big question.

Last, an October release could take some of the wind out of the sales of the Surface, expected anytime after late October. Granted, the Surface is a 10″ tablet, but having a new iPad (and the usual attendant excitement and hype that accompanies it) could cast a shadow over the Surface when it sees the light of day.

It Will Happen When It Happens

Of course, all of this is pure speculation. We’ve heard hype before about Apple products, many of which didn’t look much like the predictions, if they appeared at all. Would it surprise me to see a 7″ iPad? Not really. Would it surprise me if Apple stays out of the segment? That wouldn’t surprise me either, although I have a feeling that will be a mistake. Even if the market is smaller than the 10″ tablet market, as the market matures, I suspect it will still be big enough to matter. Ignoring it could give Apple’s competitors the lever they need to compete with the iPad. They may or may not displace it, but right now, the iPad is pretty much having its own way in the market.

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