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Apple's iPad Mini dilemma

The smaller tablet could be a sign of bad things to come for the company.

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(Photo: Apple)

As the markets have been indicating recently by sending shares tumbling, the iPad Mini could be a sign of bad things to come for Apple.

At $329, the basic iPad Mini is still relatively expensive for a 7-inch-or-thereabouts tablet, but it’s almost $200 cheaper than the latest full-sized iPad. Yet, as I wrote last week, the Mini has a major advantage over its bigger cousin: it’s much smaller and lighter. The only thing it’s missing is a full Retina display, which we can be relatively sure will be in the next model at the same price some time next year. Is a couple inches of screen size and a faster processor inside worth $200? It’s a safe bet that most consumers don’t think so, which is why Apple sold a ton of Minis in no time flat.

Once the smaller device gets that Retina display, there’s going to be little reason for the mass market to buy full-sized iPads. The larger tablet, which has been criticized from many corners for being primarily a media consumption toy rather than a productivity device, may ironically see its main use become business situations. Visual artists or sales personnel who need the larger screen might turn out to be the only people who really want these larger tablets. The rest of the mainstream consumer market will likely be quite happy with the smaller, lighter and—most importantly—cheaper iPad Mini.

A cheaper tablet obviously means less profit for Apple. Not only is there less total revenue, competition in the smaller tablet market is considerably fiercer, with Google and Amazon both having strong contenders. That $329 price tag may be forced to go lower still.

The other pressure on Apple’s stock is coming from its bread and butter, the iPhone. A report the other day found that Samsung had moved more Galaxy S3 units than the iPhone in the most recent quarter, making it the new best-selling phone for the first time since Apple introduced its iconic device back in 2007. Apple is sure to dispute how those Samsung numbers were arrived at, but regardless, it’s clear that competitors have caught up.

That’s why so many industry observers were disappointed by the iPhone 5. For the past year or so, Apple has appeared to be a company that is merely iterating its products, with a tweak under the hood here for more horsepower, or a tweak there for sharper screens.

The problem is, the company didn’t get to where it is today by being iterative; it did so by being revolutionary and by inventing entirely new product categories. Add in the recent unceremonious dismissal of Scott Forstall, the former senior vice-president of iOS who was seen as the one remaining Apple executive cut from the same innovative-yet-mercurial cloth as Steve Jobs, and it’s no surprise that the market is beginning to turn on Apple.

If the company is to regain its lustre—or at least keep from losing even more of it—it’s going to need to stay away from iterative and get back to innovative. Now might be a good time to really focus on the television project that Jobs said he had “cracked.”

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