Why Apple’s iPad Mini Could Be As Popular As The iPhone

The devil–and a billion-dollar product–is in the details.

Why Apple’s iPad Mini Could Be As Popular As The iPhone

A number of leaked pieces of hardware have already suggested the design of Apple’s next iPhone, and now it looks like a couple of iPad components have leaked, too. But they aren’t for the fourth generation iPad.


The parts are nothing more spectacular than a ribbon cable with some components dangling from them. One of these components, however, is interesting: The new dock connector. It’s got 8 (possibly 9) pins and a reversible plug. Apple’s even making the plastic part of it match the black or white styling of the device. We know it’s for a new iPad because it’s much bigger than the similar component for the iPhone, and it seems very unlikely that Apple will release a tweaked iPad 3 when the original is much less than a year old. Hence: the iPad “mini” rumors.

Why’s this interesting?

There’s nothing inherently innovative about shrinkage. But the truth is that an iPad mini, selling at a much lower ticket price than Apple’s $499 iPad 3 (and possibly even significantly less than an iPad 2, which is still on sale) could prove as popular as the company’s iPhones.

The tablet revolution is definitely upon us, as recent surveys note, and the public wants them–with the iPad decisively owning the global market. The one issue for Apple is that $500 is still a pretty high price point for what right now feels like a bit of a luxury product. A lower price iPad would entice new buyers into the tablet market.

Just how many units could Apple sell if they introduce a $299-or-under iPad mini? Digitimes, an outlet for Apple rumors with a decent track record, has learned from its sources that Apple is planning to ramp up production of the smaller iPad device from September, with a targeted rate of around 4 million units per month. A production run this aggressive suggests Apple expects to sell very many of the devices–it’s known that the company likes to maintain a small inventory. Assuming a ramp-up in production rates from September on, and an October launch date, it’s possible that Apple could sell 10 million small iPads in this period in the last quarter of 2012.

Now let’s guess that Apple will sell 15 million “big” iPads in the last three months of this year–a reasonable estimate, possibly conservative given its sales trajectory–and up to 10 million “mini” ones at a speculative price of $300 (this is less than the price of the original iPhone). With a sale ticket of $500 on the bigger unit, that could total up to $10 billion in quarterly iPad revenues.


As noted by the Guardian recently, Apple’s iPhone sales for the quarter ending in March led to revenues of $22.7 billion. Microsoft’s revenues for the entire company–Windows, Office, Xbox, Windows Phone, Bing and so on–were $17.4 billion. That’s worth repeating: A single Apple product generated more income than all of Microsoft’s wares combined.

Meanwhile Apple’s sold 84 million iPads worldwide since its launch just over two years ago–for an average price likely above the $499 entry level. And 11.8 million were sold in that same recent quarter, even though the iPad 3 went on sale in the last weeks of the period. At the least, that equates to $5.9 billion in iPad quarterly revenues, which is a quarter of the revenues that the iPhone managed.

Project a rising sales curve into 2013 and the iPad’s revenues could quickly surpass Microsoft’s quarterly revenues. From there it’s realistic to think that they’d match the iPhone’s–because the iPad market is new and rapidly growing, and while the smartphone market is still expanding there’s less room to maneuver in that crowded space.

But it’s not just about selling billions of dollars more hardware. Significant numbers of the people who’ll buy the new small iPad could be new Apple consumers–and they’ll sign up to iTunes. Then they’ll likely buy apps and other content, and that’ll probably ensure a revenue stream over several years. It’s a strategy to entice more people into Apple’s arms that’ll result in an immediate cash influx, and then a long tail of income.

No wonder Apple’s share price soared last week–and as of today it’s the most valuable company of all time–largely on positive investor feelings about the next iPhone (predicted to be one of Apple’s biggest launches ever), the iPad mini and, speculatively, an Apple TV–fueled by rumors in the Wall Street Journal.

And this–still at the rumor stage. A fact that makes all this even more incredible, strange, risky, and interesting.


[Image: Flickr user Yagan Kiely]

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