Rumors of a 7.85-inch iPad Mini ramp up; Mass production reportedly slated for September

The past few days have seen an influx of iPad rumors all pointing to a 7.85-inch iPad set for release late this fall.

They're baaack!

Rumors of an iPad Mini that is.

For months now, rumors of an iPad with a 7.85-inch screen have been circulating through the blogosphere. And though Steve Jobs once said that 7-inch tablets are "dead on arrival," the relative success of the Amazon Kindle Fire and other smaller tablets suggests that consumers are more than willing to accept a smaller screen size in exchange for a cheaper buy-in point. Indeed, you might remember that Apple CEO Tim Cook recently said that Apple saw a tremendous uptick in overall iPad sales once it lowered the price of the iPad 2 down to $399.

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And so with competition in the tablet space becoming fiercer with each passing month, albeit with smaller and cheaper devices, it makes a whole lot of business sense for Apple to enter that particular segment of the market as well.

Not too long ago, in-the-know Apple blogger John Gruber intimated that an mini iPad is definitely something Apple is exploring deep within the confines of Cupertino.

What I do know is that they have one in the lab…a 7.85 inch iPad that runs at 1024×768… it’s just like the 9.7″ iPad shrunk down a little bit. Apps wouldn’t need to be recompiled or redesigned to work optimally on it. It’s just the iPad smaller.

Earlier this week, a translated report from the Chinese-language site noted that Apple is prepping a 7.85-inch iPad with a Sharp IGZO panel for release later this fall. The report also notes that "endurance has also been strengthened," though it remains unclear if this refers to the device's durability, or perhaps a more likely explanation, its battery life.

IGZO abbreviation of indium gallium zinc oxide is a thin-film transistor technology. Using the Sharp IGZO LCD panel allows the body of the phone / tablet is thinner, while increasing endurance, and display better. It is reported that Sharp's IGZO panel optimized to achieve 330 points per inch screen resolution.

The report also corroborates previous reports of a $249-$299 price range for the device.

But can you really have a whole lot of trust in a statement from an anonymous source familiar with Apple's supply chain?

Which is why subsequent reports from Bloomberg and the Wall Street Journal are especially illuminating.

Citing two people with knowledge of Apple's plans, Bloomberg reported on Wednesday that Apple is, in fact, planning to release a smaller and cheaper iPad in attempt to stave off growing competition from Google, Amazon, and to a lesser extent, Microsoft. The report claims that the slimmed down iPad won't have a Retina Display and may be announced as soon as October - which would make sense given that Apple would want to take advantage of the always profitable holiday shopping season.

But does Apple really need to release a smaller version of the iPad when they still have the tablet market on lockdown?

In a word, yes. Again, the Amazon Kindle Fire has sold quite well and competition in the space is only bound to increase going forward. Tablet pricing is a very real consideration for many consumers and Apple has long talked about, albeit in reference to other products, how they're always conscious about not creating a price umbrella that would allow competitors to gain a foothold in the marketplace.

Further, a quick look back at Apple's mobile products highlights the company's efforts to have a product at every competing price point. The original iPod, for example, cost $400, but it was only a matter of time before the Shuffle came out for $49. Similarly, consumers can now pick up an iPhone 3GS for free with contract. In short, once Apple achieves a certain level of success with a given product, it doubles back around and prevents competitors from getting their foot in the game with lower priced products.

So, with Google set to release its Nexus 7 tablet later this month, not to mention Microsoft's own plans to get into the tablet space, a smaller version of the iPad makes a whole lot of sense. Playing preventitive defense is always preferable to playing catch up.

Bloomberg also points out that in selling a smaller tablet at a lower price point, Apple may be better positioned than the competition to actually make a profit. Not only will Apple save money by leaving out the Retina Display, it may also have favorable component deals that competitors simply can't match. Also, the iPad Mini will reportely only come with 8GB of storage. And don't forget that Apple has already attained a level of expertise at manufacturing these products at scale.

John Gruber writes,

Here’s the logic behind such a display. Displays aren’t manufactured at their finished size; rather, they’re made on big sheets, and then cut to size. I believe the iPad Mini (or whatever it’s going to be called) uses the same display as the iPhone 3GS. So instead of cutting these sheets into 3.5-inch 480 × 320 displays for the iPhone 3GS, they’ll cut them into 7.85-inch 1024 × 768 displays for the smaller iPad. Same exact display technology, though — display technology that Apple has been producing at scale ever since the original iPhone five years ago. These are displays Apple knows they can produce efficiently and in enormous quantities.

And while margins on an iPad Mini will certainly not be as high as they are on a full-fledged iPad, the ultimate goal would be to turna profit while simultaneously preventing competitors from securing a foothold in the tablet space. The more people who buy into the iOS ecosystem the better.

Bloomberg adds:

Amazon, by contrast, loses money on every Kindle Fire it sells, with the aim of profiting from sales of books and other digital media. At the $199 price of the Nexus 7, Google’s plan should be to break even on the hardware, in exchange for the opportunity to win advertising and related revenue, said Michael Gartenberg, an analyst at Gartner Inc.

Following the report from Bloomberg, The Wall Street Journal on Wednesday also weighed in with its own report of a mini iPad.

Apple Inc.'s component suppliers in Asia are preparing for mass production in September of a tablet computer with a smaller screen than the iPad, people familiar with the situation said, suggesting a launch for the device is near...

Officials at the component suppliers, who declined to be named, said this week that Apple has told them to prepare for mass production of the smaller tablet.

Assuming that the iPad Mini does come to market, it will be interesting to see how Apple prices the device. Again, early reports have pointed to a price range varying from $249-$299. But if Apple really wants to stick a knife in Google and Amazon, pricing a smaller iPad device at $199 would certainly do the trick.

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