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Apple confident about iPad Mini despite low margins

Agam Shah | April 25, 2013
iPad Mini is a drain on Apple's profits, but analysts say the company wants to bring more customers into its fold

Apple is already a very profitable company, but expectations from iPads were perhaps "overly optimistic" when going into the quarter, Tan said. If Apple nails down the market volume and size, returns from the Mini could be a profit driver for the company.

"If you do price correctly, and the volume catches up, profits for this segment may be higher," Tan said.

Financial analyst firm Cannacord Genuity is estimating iPad Mini shipments to be 10.5 million units in the current June fiscal quarter, with more than 43 million units in fiscal 2013, which ends in September.

The market for iPads is healthy and Minis will continue to eat into sales of the more expensive 9.7-inch iPad and other tablets, said financial analyst Michael Walkley of Cannacord in a research note Wednesday.

"We believe the iPad Mini significantly expands Apple's tablet addressable market internationally and should lead to strong sales throughout (fiscal) 2013 as international distribution increases," Walkley wrote.

 

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