Nov 14, 2012 01:41 PM EST
iPad Mini Won't Cannibalize Apple iPad 4 Tablet Sales, Analysts Argue

Technology analysts just can't seem to figure out where Apple's new iPad mini fits in the tablet market. Is it just a trimmed down version of the iPad? Or, is it a new device entirely? Analysts are split on whether or not the iPad mini will establish a new line of revenue or eat into existing sales of Apple's traditional iPad. If a new study is to be believed though, the iPad mini will not cannibalize iPad 4 sales.

Analyst Cowen and Co. recently conducted a survey of 1,225 U.S. adults on their upcoming tablet buying preferences. According to All Things Digital, which obtained a copy of the survey's results, just 12 percent of respondents said that they would buy an iPad mini within the next 18 months.

Out of that group, just 16.6 percent said that they were buying the tablet to replace it with another tablet. What's more, just 29 percent of those subjects said that the tablet they were replacing was an iPad.

Considering that, Cowen analyst Matthew Hoffman argued that the "iPad Mini creates more demand than it cannibalizes," said the report.

According to Cowen the iPad mini is attracting a coveting segment of the market: first-time tablet buyers. 52 percent of iPad Mini buyers currently don't even own a tablet, said the study.

Apple itself doesn't seem to mind the idea of the iPad mini eating into sales of its other devices. Company CEO Cook said as much during a 2011 conference call when asked if the iPad was cutting into Mac sales.

"Yes, I think there is some cannibalization, but I also think there is a halo effect," said Cook, explaining that some of those users will later decide to buy a Mac. "If this is cannibalization, it feels pretty good," Cook added.

Similarly, Piper Jaffray analyst Gene Munster thinks the iPad mini will cannibalize iPad 4 sales, though, he notes that the effect would likely be minimal on Apple's overall revenue.

"For every five million smaller iPad [sales], you lose one million standard iPads," Munster said.

Munster said last week that he still believes the iPad Mini will "have a slight cannibalization effect" on Apple's larger tablet, adding that his research seemed to indicate 90 percent of customers waiting in line for the new Apple products were actually looking to buy the iPad Mini rather than the full-sized iPad.

Still, the iPad Mini won't have the biggest impact on the iPad. According to Cowen, 42 percent of iPad Mini buyers plan to replace a Windows PC. Another 13 percent of iPad Mini owners will be making the switch from using an Amazon Kindle Fire.

Apple is depending on the iPad mini to address the growing consumer demand for smaller tablets that has been dominated by Amazon, Samsung, Google, Asus, and Barnes & Noble.

Apple sold 3 million of its iPad 4 and iPad mini devices combined in the company's launch weekend, CEO Tim Cook announced Nov. 5.

Of course, Apple isn't commenting any further on the matter. The company hasn't broken down those sales figures to reveal just how many of those sales represent the fourth generation iPad, and the new iPad mini, respectively. But, at least one analyst estimates that the bulk of Apple's first-weekend sales were for the 8-inch tablet.

J.P.Morgan analyst Mark Moskowitz said that most first-weekend sales were likely for the iPad mini.

Moskowitz expects the iPad mini to steal sales from the $199 tablet market and hurt the PC and e-reader markets, with momentum continuing as the cellular versions of the iPad Mini and fourth-generation iPad become available Nov. 16.

"Given the global economic uncertainty, we think price-sensitive users could gravitate toward an iPad mini instead of making a PC purchase. Our view is that the incremental use case is more differentiated for first-time tablet users. In tough times, unique or 'feel good' purchases can be more amenable to end users, which gives the edge to the tablet versus the PC, in our view," Moskowitz noted.

He also believes the iPad Mini could help the iPad become Apple's main growth market, rather than the iPhone.

"In our view, barring entry of another new category, Apple's iPad Mini could set the stage for the iPad product set to carry the growth baton in the future, particularly as iPhone growth momentum moderates," Moskowitz noted.

iPad Mini Specs

You can get an iPad Mini Wi-Fi model in three memory configurations: $329 for 16GB, $429 for 32GB, and $529 for 64GB. On Nov. 16, we'll see Wi-Fi + 4G models go on sale at $459 for 16GB, $559 for 32GB, and $659 for 64GB.

The 1,024x768-pixel resolution matches that of the iPad 2, but on a 7.9-inch display. "This definitely isn't Retina Display, but it's better-than-iPad-2 display. Videos look excellent, and the IPS screen has great wide-viewing angles," said CNET.

Includes a front-facing 720p-capable FaceTime camera, and a 5-megapixel back camera, and also supports 4G LTE, 802.11a/b/g/n Wi-Fi at 5.2Ghz, Bluetooth 4.0, and will use Apple's Lightning connector, first seen on the iPhone 5.

Apple claims that the Mini has a 10-hour battery life.

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