Apple is planning to bring a cheaper, smaller version of its current iPad by September this year, two people familiar with the plans told Bloomberg. The new model would come with 8-inch screen; one person said that the Cupertino-based company is already working with screen makers including LG Display Co. of South Korea and Taiwan-based AU Optronics Co.
Apple’s component suppliers in Asia are gearing up for the launch of smaller iPad. The officials at one of Apple’s component suppliers said on condition of anonymity that Apple told them this week to prepare for the mass production of the smaller tablets.
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The Wall Street Journal had reported in February that Apple was testing a smaller tablet, even before the current iPad was launched in market. However, people familiar with the information at that time told WSJ that the company hadn’t decided whether it would go ahead with the device.
Apple iPads are facing new challenges as Samsung, Amazon, Google Inc (NASDAQ:GOOG) and Microsoft Corporation (NASDAQ:MSFT) are crowding the tablet market. They are all eager to gain a foothold in $66.4 billion tablet market dominated by iPad with 62 percent worldwide market share. Therefore, all the Apple’s competitors are eyeing on the market untouched by Apple – the mass market that wants tablets at affordable price.
Apple Inc. (NASDAQ:AAPL) plans to make the new gadget affordable, so it could be the worst nightmare for Google Nexus 7, Amazon Kindle Fire and Microsoft Surface. The Asus-built Nexus 7 is equipped with a front-facing camera and faster processor. We think competing with a low-priced iPad won’t be easy. There are over 225,000 apps specifically developed for iPad.
With the smaller tablet, Apple can increase sales without sacrificing on margin profits either. It earns about 35 percent net margin on the current iPad. The same sources told Bloomberg that the smaller tablet won’t have the high-definition screen featured on the current iPad, so the manufacturing costs wouldn’t be that high.
Google started selling Nexus 7 through its online store last week for $199. Amazon Kindle Fire which was launched last year, also comes at the same price. Microsoft’s Windows Chief Steve Sinofsky said that the Surface tablet will be “priced like comparable tablets.”