The new… iPod Phablet
I blame Francis. After all, he got the ball rolling when he asked the team:
Apple 5″ device, how likely are we thinking? I still have my bets on a smaller iPad, but not sure about 5″.
Carly jumped in with: Unless they bump the iPod touch to 5in to differentiate it.
Chris then said: I could see them doing that to the iPod touch possible, but not the iPhone.
I (Dan) then commented: That’s the post I was roughing out- the case for the iPod touch HD. Personally I think it is very likely. They didn’t update the touch last year and with older iPhones available new for pennies (on contract of course) the touch has lost much of its reason for being. Bumping up the size a bit differentiates it, takes on the kindle fire and maintains that space for Apple. It makes perfect sense which is why Apple will do it.
There was a bit more back and forth:
Chris: I also think that is more likely than an iPad mini but I can see a possible case for that too.
Francis: Yup, Apple has nothing currently in the 4″-8″ space which is potential customers they are losing. Not saying Apple is hurting on customers, just a market there that they have yet to conquer. writing up a post on displays which play in a little bit, still have my bets on smaller iPad. I think they are ready to move past the theories of old dealing with a smaller tablet.
The conversation turned when Chris wrote: I’m not sure about the space. I’ve seen things that talk about the economics of an Apple device in that size range and the pricing requirements generally make a case against such a device. Not enough profit no matter how many they sell, or you have to compromise the build quality/materials to make it work. I’m not sure Apple wants to do either, but an upscaled iPod touch might be able to work since they can charge a premium for that.
I mean an iPad mini might not be economically desirable for Apple
I replied: Chris- Here is what you are missing. They don’t need to make a profit. that would be nice but they really need to get people into their ecosystem. That alone is worth it to them and, at the moment, anyone looking for a smaller device than an iPad but not as small as a touch they need something in the space.
Carly: So Dan, do you think there will be an iPad mini or just an iPod touch HD? I think keeping anything below iPad size in the iPod touch line gives it the “entertainment, not productivity” angle, which would make more sense to me.
Chris: Dan I don’t think I agree. Apple has rarely played the “loss leader” game and I’d be surprised if they started it now. I think you are assuming they would do so now. I disagree. I think if they can find a way to keep things premium – by maybe upscaling an iPod touch, I’d buy that idea, but unless the economics of building an iPad mini change, I can’t see them going that direction. They generally haven’t done it before and I don’t see a reason for them to start now – they are not losing people from their ecosystem – it actually keeps growing, so what’s the need that would drive such a move? I don’t see it. I could be wrong, of course, but I don’t see a significant “need” to enter that space. After all he numbers already showed Kindle Fire sales collapsed after Christmas whereas iPad sales didn’t. Yeah – I’m not seeing the driver here.
Dan: Chris, they never played the pricing game either but look how they have moved down the market. They don’t do budget but the certainly have found more accessible price points.
Chris: Yes – by leveraging old products, not by releasing new ones. like I said – I could be wrong, but I don’t see it happening without one of the other factors I mentioned changing.
Carly: Yeah, but the iPad and the Kindle Fire are different products. One is a full productivity device and the other is an entertainment device. Plus the kindle fire has still done better than most of the android and ereader competition. The only place it really looks bad is if you stack it against the iPad and that’s a loaded comparison.
And they absolutely have brought down price points with new products. From the iPod mini and nano to the various levels of the iPod touch line.
An iPad mini/iPod touch/tiny tablet makes a ton of sense for Apple. They capture a market that wants something between iPod touch size and iPad size. Every night Sarah curls up with her kindle fire to watch prime tv and read, and I don’t see her doing that with something the size of an iPad. It’s just too big. I also think it could be the perfect size for education, especially as a way to augment existing tools. A 7in device would be cheaper, for sure.
Chris: Well first – as I mentioned, Fire sales tanked after Christmas and I haven’t seen anything to indicate they’ve returned to pre-Cristmas values. Second – I would argue that more people use iPads as “consumption devices” than computing devices. The only comparison I was doing was to indicate that the iPad sales didn’t fall off when the Kindle Fire sales did. I am not 100% ruling out such a device in Apples future – I am simply suggesting that it is unlikely given their history.
Also – you mention the iPod Mini and Nano – but I think those are bad examples because those sacrificed features to obtain that lower price – in other words they did it by also reducing cost. An iPad Mini wouldn’t get to enjoy those economics because what features are you going to sacrifice? The 7″ devices really cost almost as much as the 10″ devices to make – not much savings to be had from a smaller device plus you will be hurting run time – 7″ devices generally have poorer runtime because of the smaller battery size. It has been shown that the devices below that $499 price point generally don’t make money and the Kindle Fire is sold at a loss! That is not Apple’s style – they don’t need to grow their ecosystem because it continues to grow at a nice pace.
So I still maintain that there is no need for this product in Apple’s lineup and it doesn’t make much sense from a business perspective. That said, they could possibly still do it, but something would have to give – and if it’s materials/build quality then that would be dragging the brand down and I don’t see Apple wanting to do that after they have spent so much time building it up. I don’t think it is that important to their bottom line to carry a 7″ device. So as I said, if they could do a 5″ upscaled iPod Touch, that would be more likely, in my estimation, than a scaled down iPad mini. Either way, I suspect we will know soon enough!
Francis: Chris wrote “Fire sales tanked after Christmas and I haven’t seen anything to indicate they’ve returned to pre-Cristmas values”
The media misread the data, an NDC analyst explains.
I know Apple doesn’t need the market share, but you can be for damn sure they want it. Whether it’s 5 or 5 million. It looks like an iPhone/iPod with 4″ screen and resolution change, as well as an iPad mini 5-7″. It’s not about holding ground anymore, it’s simply a matter of evolving. This is the logical next step.
Chris: OK – I hadn’t seen that update on the Fire sales – thanks! And a 7″ device is the next logical step from a consumer perspective – not necessarily from a business perspective. It is only a next step if it makes financial sense – and I’m not convinced the economics are there to bear this out. I can’t see them doing this at a razor-thin profit margin or a loss like Amazon does. Unless they have found some amazing way to reduce the device cost (which is also possible, of course!) I don’t see it happening. Personally, I think WWDC – where any announcement is likely to happen – is more likely to start talking about a TV than it is an iPad mini.
Michael A: The article Dino references is one reason I wrote a post some weeks back about these market share numbers – these ‘sales’ or ‘shipments’ aren’t even REAL! They are guess-timates! I would still estimate Fire as #2, FWIW.
Francis: Michael- yup, the numbers game is a mess. This time the inflation or was to the lesser instead of more. Kindle Fire did pretty well on actual orders shipped to customers, not from suppliers. Amazon is releasing more Kindle Fire’s this year, rumor states 2 more models. With Nvidia vowing the $200 price point, it will at least allow more ‘numbers’ to move to those looking for cheaper options. Either way the consumer wins. I could care less about how much a company makes off me.
Chris: Yeah- the numbers are not real and since Apple is one of the only companies to report “real” numbers it’s always difficult to tell for sure – they dropped, but it’s not clear how much.
And that lower price points exactly why I don’t expect an iPad mini – you might not care how much a company makes off you but you better be certain that if there isn’t a payoff for the company the company won’t go there no matter how many they could sell. Amazon can afford the loss leader because it reflects back in additional market sales and it brings people to the larger amazon website AND they are subsidizing the whole mess with ads. The iPad doesn’t offer that kind of experience. It doesn’t need to grow the market for it’s eco system – it already has the lion’s share and I don’t think it would grow their ecosystem market share that much to offer such a product. So it if can’t make it based on its own sales then Apple isn’t likely to do it (in my opinion). But we will see – they have certainly surprised us before – maybe they have some amazing ay to lower the cost and not sacrifice features or quality – if so then it would due a lot more viable.
So what do you think? Will there be a jumbo iPod touch? Or a diminutive iPad? Why or why not? Let us know in the comments.