The prevailing consensus regarding the motivation for the creation of the iPad mini is that Apple needs to compete with the 7″ tablet market. The 7″ market is currently dominated by the Google/Asus Nexus 7 and the Amazon Kindle Fire series (in the US) and is the only category of tablets successfully taking market share away from the iPad. While this is one of the reasons, it is not the reason.
The real reason why Apple needs to launch the iPad mini, is because the 10″+ tablet is going to go through a radical change in definition on October 26th.
With the launch of Windows 8, the iPad will no longer be compared to Android tablets, but rather, Windows 8 tablets and laptops.
To understand why, take a look at some of the Windows 8 tablet/laptop products launching in the next few months.
Everyone is hedging their bets on convertibles. That is, tablets that become laptops. Look at the hardware differentiation present here: swivelers, dockers, sliders, flippers, dual screen, twisters and everything in between.
The iPad is designed first and foremost for media consumption, that is: social media, video, photos and music.
However, these Windows 8 tablets do everything the iPad does, then become full fledged laptops for office software and productivity apps. Some include styluses for graphic artists and traditional note takers. Placed next to any one of these, the limitations of the iPad are readily apparent from a glimpse alone.
The True iPad Killer: The Microsoft Surface
This tablet was designed by Microsoft to compete directly with the iPad. What’s so ingenius about this tablet is not that it does what the iPad does but better, but it changes the perception of the iPad.
If you walk into the tablet section of an electronics store today, you will see a row of tablets that pretty much look the same from afar (rectangular slabs), save for the screen size. However, imagine walking into the same store a month from now. All of a sudden, you see what looks like laptops, in the tablet section….for the same price. You see some amazing looking hardware you’ve never seen before. Convertibles of every type of configuration. The sales guy doesn’t need to spend 20 minutes comparing these tablets to the iPad. No. Instead, he just says, “this runs on the newest version of Windows. It’s like an iPad when you detach the keyboard, then like your home computer when you attach the keyboard. It also comes with Microsoft Office preinstalled.” The iPad is no longer compared against other tablets, but rather against tablets and laptops. The iPad no longer defines the category, Windows 8 does.
The Microsoft Surface Launch Price
Contrary to rumors onlines, I don’t think the Surface will launch at $199. It will most likely launch at $399. It might launch at $299 or $499, but I think this is unlikely. Add $50 for the touch keyboard. At these price points, they undercut Apple without starting a massive price war amongst their own hardware partners. If Microsoft launches the Surface at $199 or $299, this will lead to dismal sales from the likes of Samsung, Sony, Lenovo and everyone else. It would lead to the most unprofitable product launch in history…for everyone. You have to remember that Microsoft makes money from licensing their software to manufacturers. It is not in their interest to make the entire industry unprofitable.
Update: The Surface has been officially revealed to be $499 + $100/$119 for the Touch Cover.
Why The iPad Mini Is So Important
Up until now, I’ve spoken about the iPad vs. Microsoft Surface and Windows 8. However, Windows 8 is a terrible OS for screen sizes below 10″. There’s no way around it. It just isn’t designed for smaller screens. This is why the 7-9″ category is so important to Apple.
Here is how the market is currently divided:
3″ to 4.5″ = Smartphones
4.9″ to 6″ = Phablets
7″ to 11″ = Tablets
11″ to 13.3″ = Ultrabooks
Now this is how the industry will be defined next year:
3″ to 4.5″ = Smartphones
4.9″ to 6″ = Phablets
7″ to 9″ = Tablets
10″ to 13″ = Convertibles & ultrabooks
The definition of a tablet will actually shrink. This is why Apple needs the iPad mini.
The Future Of The iPad
Don’t get me wrong. The iPad, in its current form, will still sell well for one or two more years. However, it will likely lose its market share dominance to Windows 8. This isn’t necessarily because every potential iPad buyer will switch to a Windows 8 convertible, but because a large number of potential laptop buyers will instead buy a convertible. Apple won’t change iOS to compete with Windows 8 convertibles. iOS will stay the way it is, but they will need to change Mac OS. I don’t know how or when, but Apple will need to launch a touch friendly version of their desktop OS and push it downmarket and create a new product in between the iPad and the Macbook Air….something potentially resembling the Microsoft Surface.