An iPad Mini could wind up cannibalizing sales of larger models while budget-sensitive shoppers opt for competing devices at prices too low for Apple to meet or beat, according to analysts.
Kay said that Apple would be making a “defensive” move with the new device, but that it is unclear whether it will trounce established products from Amazon, Samsung and others.
“Apple wouldn’t have gone into this if others hadn’t,” he said.
“The bar has been set by Amazon. Even though the Kindle is not the same kind of device, it does what it does very well.”
Analyst Shaw Wu at Sterne Agee said the iPad Mini “is the competition’s worse nightmare” but that sales will depend on how Apple prices the device.
“We do not believe Apple needs to price as low as $199 to match Google’s Nexus 7 and Amazon’s Kindle Fire HD but believe a price point of $299 or $349 makes sense,” he said.
Ben Reitzes at Barclays said the Mini may erode some sales of the larger iPad but will grow the market.
An unconfirmed report out on Monday indicated Apple planned to woo teachers, students and schools with the iPad Mini, fitting it better to tight budgets and winning young devotees to its company’s products.
“We believe a smaller iPad could be useful in promoting Apple’s agenda in education with e-textbooks,” he said.
“Also, the form factor could make more sense for gaming.”