Mini iPad 3 In the Works?

Amazon’s Kindle Fire has proved that a tablet can be relatively small and still sell well. So why can’t Apple create a smaller, less expensive version of the iPad to compete with a product that is taking sales? In fact, the Kindle Fire has taken away as many as 1 to 2 million sales away from the iPad, according to Morgan Keegan analyst Tavis McCourt. Granted, Apple is still selling its iPad in drones and the iPad has 61.5% market share of all tablet shipments in the world, slightly down from 63.3% market share in the preceding quarter. Regardless, a less expensive iPad may help solidify Apple’s dominance at little risk to its bottom line.

The Wall Street Journal is reporting that Apple is testing designs for an 8 inch model of the iPad, which would sport a resolution similar to the iPad 2. Whether or not such a design comes to fruition will likely be revealed in early March, when Apple is expecting to announce the iPad 3. According to analysts, diversifying the iPad portfolio would be a wise strategic move because the tablet market is getting increasingly competitive. Furthermore, Apple has shown in the past, through its iPod lineup, that diversification can lead to a decade’s worth of market share dominance.

Steve Jobs, in October of 2010, said that the current 9.7 inch size of the iPad was the minimum size needed to support tablet apps. If he were alive today, he’d likely still stand by this statement. At the same time, the market has shown that people are willing to sacrifice screen size for a lower price. Although the Kindle Fire may not be taking away too many sales from the iPad, the Kindle has become a favorite of those who’d like to read in color due to the portability of the device. By making a competing 8 inch tablet, Apple is opening up itself to another market segment that isn’t willing to spend $500 on a tablet and isn’t too worried about having a top of the line device.

Aside from a smaller iPad possibly being unveiled, Apple is expecting to announce an iPad 3 with a retina display and a quad-core A6 chip on the first week of March.

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