Why Apple would release a 7-inch iPad

Back in May, iMore heard that Apple planned to move ahead with a 7-inch iPad this fall at a $200 price point. Stories about a smaller iPad have been around for a while, but as far as I know that was the first time such aggressive pricing got tagged onto them.

The reasons Apple was planning this, we heard, was the same reason they planned and executed on the lower price point iPod mini and iPod nano -- to take the oxygen out of the market. In this case, to leave no room for discount competitors like Amazon and Google.

Some have a hard time believing Apple would enter the low end tablet market. Apple didn't make a netbook and didn't release an iPhone nano. They thought differently and released the MacBook Air and the iPad, and kept around previous generation iPhones instead. Steve Jobs went so far as to say 7 inch tablets were DOA. So Apple couldn't, wouldn't, and shouldn't do an iPad mini, right?

Yet there's that iPod mini/iPod nano precedent, and the $999 11 inch MacBook Air which is proving incredibly hard for competitors to match in the "ultrabook" space.

I think the 7-inch iPad is one of those, and something that will seem obvious in hindsight, and for the same reasons all of Apple's successful products do -- it will serve their core business.

We've discussed this several times already on the iMore Show, and I went over it on MacBreak Weekly last week, but it bears exploring in written form.

Apple's goal is to mainstream computing. They want to sell hundreds of millions of devices that delight exactly the type of consumer usually left frustrated and alienated by technology.

Amazon Kindle bikini ad

While neither the 7 inch BlackBerry PlayBook, nor the 7 inch Amazon Kindle Fire, nor the 7 inch Barnes & Noble Nook Tablet took the world by storm, they weren't iPads. They didn't focus on a simple, consumer-friendly interfaces, tablet-specific apps, and content that was accessible beyond U.S. borders.

They blew it. But they won't always continue to blow it.

When talking about why Apple might do a 4 inch iPhone, the reality of the market came down to this: Right now customers have to choose between an 3.5 inch iPhone and a 4+ inch not-iPhone, and while many are choosing the iPhone, many are also choosing the 4+ inch not-iPhone. By going to 4 inches, Apple probably won't lose any customers, but could gain more of those who previously chose the bigger screen, not-iPhone device.

Similarly, even considering the current iPad's incredible market lead, some customers are still choosing between it and a smaller and/or less expensive tablet.

Walk into a coffee shop or waiting room or airplane, and while you see a lot of iPads, you may just see a few eReaders too (and a once in a while one of those Fires or Nook Tablets or PlayBooks...)

Google has now announced their own, ASUS-manufactured, Android 4.1 Jellybean-powered Nexus 7 tablet as well, and at $200. They also revealed to AllThingD that, when commerce and marketing are considered, they don't intend to make much if any money off it either.

While that brutally cuts the legs out from under "partner" Android tablet manufacturers like HTC and Samsung who don't enjoy Google's advertising revenue stream and actually do have to make a profit off hardware to keep products on the shelves -- and once again shows being Google's friend can be just as dangerous as being their enemy -- it also puts a small, almost dirt-cheap not-Apple tablet on the market. One that's running the latest and greatest version of Android.

Amazon will more than likely bring a Kindle Fire 2 to market at some point as well, and they've shown a similar willingness to take a cut in hardware profits in order to make money on content. (The first Kindle Fire is more front-end for the Amazon U.S. store than it was real tablet -- so much so it's almost useless outside the U.S.)

Microsoft may have just announced current iPad and MacBook Air competitors in the Surface for Windows RT and Surface for Windows 8 Pro tablets. They've also got a deal with Barnes & Noble, however, so smaller sized, lower end tablets aren't touch to imagine.

Apple sat out the low price, low margin netbook market because they said they didn't know how to make a cheap laptop that didn't suck. They also accused competitors of going to 7 inch tablets because it was the only way they could match Apple's 9.7 inch iPad price.

Several years ago Apple was better but more expensive. With the iPad and MacBook Air, we've seen the results of Tim Cook's logistical prowess -- Apple is now better and increasingly less expensive.

iMore TV 25: New iPad vs MacBook Air -- Which should you buy?

If Apple can make a 9.7 inch iPad for the same price Apple's competitors can make a 7 inch tablet, how much would it cost Apple to make a 7 inch tablet?

It's hard to imagine a $200 7 inch iPad having huge margins, but it was hard to imagine a $500 9.7 inch iPad having huge margins in 2010. Now the entry-level 9.7 inch iPad 2 sells for $400.

Given Apple's economies of scale and logistical brilliance, they're likely better positioned than anyone else to to keep the bill of goods as low as possible. Given their model of ramping up prices with storage, it's also not hard to see a $300 and perhaps a $400 7 inch iPad as well, all far more profitable than the base model.

That would leave the absolute lowest cost model for those for whom price is the ultimate deciding factor, including perhaps schools and business, and higher end options for those for whom a smaller size is what matters.

Like the iPhone and current iPad, that could mean hundreds of millions of devices sold, starting with the next holiday quarter.

A Google Nexus 7 is compelling compared to the Kindle Fire and for those for whom the current iPad is simply too big. It's not nearly as compelling for mainstream users as a 7 inch iPad.

Likely, nothing is. At least not now.

A 7 inch iPad ties up the tablet market for Apple, further democratizes computing appliances for the mainstream, and gives Apple another blockbuster product.

Given all that, it's getting harder to imagine Apple not releasing it.

Rene Ritchie

Rene Ritchie is one of the most respected Apple analysts in the business, reaching a combined audience of over 40 million readers a month. His YouTube channel, Vector, has over 90 thousand subscribers and 14 million views and his podcasts, including Debug, have been downloaded over 20 million times. He also regularly co-hosts MacBreak Weekly for the TWiT network and co-hosted CES Live! and Talk Mobile. Based in Montreal, Rene is a former director of product marketing, web developer, and graphic designer. He's authored several books and appeared on numerous television and radio segments to discuss Apple and the technology industry. When not working, he likes to cook, grapple, and spend time with his friends and family.

  • I still say no, unless Apple can stand on stage and proclaim the 7 inch tablet to be better in certain situations than a 10 inch, it won't happen; again, I predict iPad 4 at 500, iPad 3 at 400, and iPad 2 at 300 in 2013
  • A 7" tablet might actually fit in a purse.
  • A 7" iPad would also create an affordable device to support Apple's textbook initiative. Presently the purchase of a $400-$800 device doesn't make sense to save $75 on a textbook. Yes, digital textbooks are a great experience, but with budgets as tight as they are, traditional books still have a cost advantage for school administrators. More devices in the hands of more students allows Apple to sell more textbooks by day, music in the afternoon and video at night.
  • Umm. I assume you're aware that most students buy more than one textbook? Dozens over the course of a 4 year degree perhaps?
  • Yes, but the main market is not just university. With a life span of 2-3 years for the device, the payback for the full sized iPad in public funded primary schools just doesn't make economic sense.
  • I'm going on the record with Apple releasing a $300 9.7" tablet at 8 GB but I doubt a 7" tablet. Just because the market wants one, Apple doesn't typically react to the market...they respond.
    What seems obvious is typically not what they do.
  • Great piece as always Rene and I completely agree with the rationale. There's a market for a 7-inch tablet and it will grow ever larger if there's a 7-inch iPad out there.
    Also, looks like a typo in this graph, unless I'm not getting it: "They've also got a deal with Barnes & Noble, however, so smaller sized, lower end tablets aren't TOUCH to imagine."
  • From my observation google hastily launching products just to be the first just like new features for google maps then they follow through with nexus tablet. I think google knows that apple is launching a 7inch tablet now the advantage of apple is that they get more profit not just for the hardware, they want to expand the newstand plus more buyers for music they will quietly kill the ipods. Im guessing 4' iphone, 7 inch tablet (399-500) depends on storage, ipad 4 ($500), ipad 3($399). No more ipad 2 and it will be replaced by 7 inch tablet. So launching 2 tablets and presenting them with different use will sure get different market.. The iphone 4, 4s and iphone 5 will be tough to beat since they will all offer retina display. They just created mid-high market without sacrificing the ecosystem from appstore from different device and they all sync with use of icloud.
  • You are a great writer Renee, and I am not trying to be inappropriate. However, here is my take on it:
    They'll make a 7 inch icon grid that lacks basic features (but it just works lol), charge anything to get people locked into their oppressive walled garden, and then sue other mfgs for the 7 inch size and square shape. The users (disciples) will walk around snottily touting their 7 inch apple hardware with the iOS 6 'new features' which include attaching a jpg to an email, and searching from the address bar! in mobile Safari not realizing that the other 7 inch tablets give you more features and value for less money. Suddenly it will be the most perfectly weighted tablet that fits just right everywhere and is made of the most perfect materials- the "7inch tablet done right". sigh The Apple cult proliferates. - hehe, not disparaging any particular person.
  • Sorry, I misspelled your name. Rene*
  • The new iPod Touch...
  • Great article. I do think apple will release a 7" tablet along with the new iPhone this fall. But what does that do with the iPod touch most likely going to the same screen size as the new 4" iPhone? How will that be priced? If they could get a 16GB Touch in the 180 price range they could destroy the portable gaming market! I think they should name the 7" iPad the iPad Mini, and the 4" iPod touch should become the iPad Nano.
  • IPad Mini it's not a great name. In fact. It's not really good at all. The iPod Touch it's not dead. It will come in a 7' inch form...
    New iPhone = 4''
    New iPod Touch = 7'
    iPad = 10
  • Destroy the gaming market? Really?
  • I noticed you threw a "delightful" in there. ;-p
    From what I read in recent articles, one way that Apple does what it does at the level of quality that it does at the prices that it does is because they buy up every goshdarn widget their suppliers can make, thus starving their competitors and keeping their prices (relatively) down.
    Since 7 inch tablets are already out there, and they're beginning to get pretty decent hardware, it seems more difficult for Apple to do the same thing at that size - especially since I'm guessing that their suppliers would rather not be locked into another similarly lucrative but rather all-eggs-in-one-baskety type of deal.
  • 25+ years back my boss said that any point could be argued by simply asking "Why?" until your opponent either walked away or hit you! I feel that any product needs a compelling answer to it, because of the investment and risk involved.
    The Nexus7 is being launched because NONE of the Android players had stepped up to the plate and offered a compelling tablet at a price people would jump on. Now the "Play" ecosystem needs one and this is the answer.
    Anyone who has used both 7 and 10 inch Tabs will realise they offer radically different "Compelling User Experiences" (to use a more iOS term). I feel there is a case for making a 7 inch iPad. So one should ask "Why would Apple choose NOT to make one?" It would dilute the existing user base. The existing product meets 85% of applications as well or better. Since it has to be sold on "quality" the iPad2 is still a better option. Personally I think they have a production ready design, but are concerned about point 1 above.
    I also think they should do it anyway. How about you?
  • Why would Apple sabotage the iPod Touch and sell a mini pad for the same price. This type of cannabalism makes no sense (a 7 inch pad cannabalizes both the same priced but less expensive to make iPod touch and higher priced iPad).
    I can see a 5 inch iPod touch sooner than this tripe. If this happens, Jobs is not only dead, his vision is gone.
  • Maybe someone would want a 3.5" device instead of a 7"?
  • You must be prepared to innovate, and when appropriate, eat your young in order to survive. Some of Microsoft's issues can be related to having segments of their business with too much internal say-so to allow better ideas to flourish and replace old paradigms.
    Rene's article, as usual, hits all the major points. Ultimately it comes down to a decision that is as much or more about form and user experience as it is about cutting competitor profits. To some extent I’m sure that Apple saw how the iPad and later on the Air would eat into their Mac sales. Desktops are slowly becoming obsolete for general, non-business users. Single purpose devices like the iPod are slowly going to die off from mainstream use and be replaced by the everything device....which all smart phones are becoming. Talking on a phone device is only a small segment of its daily usage now.
    The iPad is the right size to increase productivity over the phone form factor, just as the Air (all laptops) increase functionality over the iPad. While a small segment of the market may think a 6" or 7" device to be useful I'm not convinced that there is a compelling productivity rationale for a smaller size...one that fits between the iPhone and iPad forms. The phone size is the most portable, yet still functional. Increasing it even slightly you begin to lose the portability value. My phone can easily be kept out of my way, hidden on my person until needed. Larger forms factors require more device attention, where you become more aware of holding, carrying and protecting it. I think that dividing line between conspicuous and inconspicuous is critically important in the decision.
    If Apple releases an in-between size then I think it is simply to bash competitor’s profits and function as free cocaine for those that have not sampled the Apple drug yet.
    Ultimately the battle will be waged between the companies that understand Apple's user interface (the simply and elegantly, accessible functionality for the masses) and those that continually strive to jamb in more and more niche functionality (entropy) into designs. Anyone can make a 9" or 7", and ultimately a flexible, wearable, fold-out, biopowered, neural-integration, Borg-like computing device. What will make or break companies will be the UI design. Does it just work? Right now Apple, though Job’s obsessive vision, is still on that course. I think the 7” market could be an indicator of a shift from that course.
  • http://www.youtube.com/watch?v=7GRv-kv5XEg
    Here's a Youtube link to the iPod Nano introduction. At the time, the iPod mini was Apple's best selling hardware ever but they killed it and offered this instead.
    Why would Apple kill its own best-selling hardware ever? Because they could do better and from their perspective, better they cannibalize themselves rather than have someone else do it to them.
  • For the last several years, the iPhone has been cannibalizing the iPod, including the iPod Touch. Last quarter, Apple sold 35 million iPhones and only 4 million iPod Touches. The cheaper the iPhone becomes (now starting at $375 w/o contract, soon $299), the less sense an identical 3.5 inch WiFi tablet makes. At that size, except for a few fringe cases, every customer wants a cellular connection. When I see this, I wouldn't be surprised if the iPod Touch actually went away completely, being replaced by a 7 inch device which may or may not be called iPad.
  • Between a 7" ipad or a 7" Jellybean tablet, Jellybean seems very tempting.
  • I think a 5 or 7 inch iPod touch is what we will see.
  • I can see a 7" or 7.85" iPad "mini". But not at $199. At least $249, more likely $299 for the 8GB version. Personally I don't think Apple should release one, but I think they will.
  • All i know is that I'll get one for my 6yr old daughter the first day Apple releases one and sell her current ipod touch. I cringe a lot when she's using my ipad hoping she won't drop it. I'd love a cheaper option for her. Especially something lighter but bigger than the ipod touch that she has to hold too near her face.
    But what I don't get is this 8gb stuff. Please stop. I can't even justify buying a 16gb version because that's hardly any storage. Think about it. iPhones and ipod touch's ramp up to 64gb. So do ipads. Why would we want 8gb on the mid size one? Especially if there's no 3G ones.
  • I have two reasons: Jobs is dead. Money.
  • The 7 inch iPad would be a best seller product in market after its release and will win the competition race of gagdet technology.Apple also strives to do better with latest and unmatched technology in the market.http://itunes.apple.com/us/app/device-locator-for-iphone/id499696486?ls=...
  • If they don't release one they are arrogant. Hubris and all that...
  • I never used to think Apple would release a 7" iPad, though I'm sure they have one sitting in their labs. But the Nexus 7 may be the tipping point to compel them to close down 7" competition before it gets started.
    HOWEVER... Apple don't go backwards. Ever. Releasing a 7" version of what they already have just ain't gonna happen. So unless they can do something quite new and different with the 7" variant, I don't think they will launch it. It's going to take liquid metal technology or haptic feedback or something to get an iPad 7" out, plus full connectivity options that the Android / MS tablets don't have. Or something quite different that hasn't even been thought of.
    Unless they can find a new angle on the 7" form, they won't do it. And soon enough, with a larger iPhone plus iPad 4 and a price drop of the rest, they won't really have to.
  • My wife has an iPad (original), and I hate using it. It is big, heavy, and just generally uncomfortable to hold for any extended duration. I love and own many apple products but have never had a desire to own an iPad. A 7" version could change this. It would be totally portable - something the iPad really isn't. Cause I want the iPad to be portable in the same way my iPhone is; not like my macbook air is. I guess I want it to be conveniently portable if that makes any sense. Anyway, what I'm tryin to say is the iPad in its current form factor will never be in my electronics portfolio. But a 7" iPad would get scooped up right away. Have at it, Apple. You'll get even more of my money, you funds-depleting bitch!
  • I'm always excited when these rumours spring up. I love my iPad and I use it everyday but I still have the original one and it's pretty clunky. I used to bring it everywhere with me in my bag but it's just a bit too big to carry around all the time. I still use it at home but I find myself using my old e-reader on the go.
    I would wait in line for a 7inch iPad, I don't want to get one of the newer generation iPads because of the same issue, it's not a practical size for me personally. I think there are a lot of people like myself who even though I love the experience on my ipad I am being swayed to the smaller tablets.
    I don't really see it cannibalizing the market too much, the people who are going to want a cheaper or smaller tablet are going to buy those anyway instead of an iPad.
  • 7-inch is too small. Just either get the normal sized iPad or an iPod touch.
  • Apple already has a smaller tablet that costs $200. It's called the iPod Touch.
    You're claiming that Apple is going to release a new product with 4x the screen size of the iPod Touch, for exactly the same price. That's ... very interesting.
    One explanation could be that they've been selling the iPod Touch at a massive markup, and are ready to drop its price, and add something new at that price point. That seems hard to believe. The iPod Touch has been a huge hit for Apple, but nobody else has been able to keep a device like it on the market. (Microsoft sold a Zune for a while, but no more.) It's probably only with massive production runs, thin margins, and content stores behind it that they can get the price that low.
    Another explanation is that at $200 this new tablet would be sold at a loss. In other words, predatory pricing, to combat the other 7-inch tablets. This seems even less likely. Apple historically doesn't move into a market just because their competitors do, and with their current success they're not going to want to touch a strategy of questionable legality.
    Nobody likes to put two different product lines so close in price. You'll probably see a $200 7-inch iPad when the iPod Touch gets down to $100. It'll happen someday, but probably not this year.
  • If the Android device is $199, Apple can easily get away with $299.
    As for the iPod Touch, you like to describe it as "huge" which is always a popular, yet unspecific, term. The iPod Touch has been the slowest growing of the iOS family. In the first years, it used to sell around 50 to 75 % of iPhone volumes. Today, it barely does 20 %. The iPhone is still doubling every year, selling more than 150 million this year, while iPods are shrinking, and the iPod Touch probably flatlining below 20 million per year. With iPhones getting cheaper every year, there's just not much of a reason to sell iPod Touches anymore.
  • I think Apple will not release a 7 incher for a couple of reasons, first because it will undercut 9.7 iPad sales diluting the iPad brand in the process, second because it will be proof that Apple gravely misread the market and now is playing catch-up with everybody else, something Apple hubris will never admit to.
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