SAN FRANCISCO - MARCH 02: An attendee plays with the new iPad 2 during an Apple Special event to unveil the new iPad 2 at the Yerba Buena Center for the Arts on March 2, 2011 in San Francisco, California. Apple CEO Steve Jobs unveiled the iPad 2 as the successor to its popular tablet, the iPad. (Photo by Justin Sullivan/Getty Images)
Could Apple be considering creating a $200 'mini' version of the iPad to compete with Amazon's $199 Kindle Fire? Analysts say that Apple is considering a low-cost version to be launched early next year.
Analyst Brian White of Ticonderoga Industries toured China and Taiwan and spoke of rumors he'd heard along his trip. The "mini" refers to the low price, not the size of the device which will still be the same as the iPad 2, AppleInsider reported.
"We believe this lower priced iPad could be priced in the mid-to-high-$200 range," White wrote in a note to investors. "We expect this will be followed by a much more powerful, feature rich standard-priced iPad 3 in (the second quarter of 2012)."
Like White, we also believe that a cheaper iPad would do well for Apple in developing countries where $200 is more like a month's wages than a day at the grocery store. But we have to consider that the current iPad 2 is estimated to cost approximately $325 to make, so a $200 price is a lot to whittle down. Amazon is selling its $199 Kindle Fire at about a $10 loss on each unit, according to Inc.com, so Apple would have to be willing to also take a loss.
Amazon makes money by selling books, ebooks or otherwise, but Apple still makes its big money selling its hardware. If Apple wants to compete with Amazon, it too will have to change its business strategy and realize the true profits may lay in the apps and downloads, rather than the devices.