While Apple has an already established App Store and iBookstore, Enderle doesn't think that will be enough. "The killer apps are pretty much already on the Kindle and the Nexus 7, which is going to make it much tougher for Apple to break in," he said.
And it's not just the Kindle and Nexus that Apple will be competing with. "Apple could cannibalize its larger iPad sales with what is a smaller revenue product and that doesn't work out for them, either. There are a lot of ways this could go wrong," Enderle said.
The questions are whether Apple will price the mini iPad aggressively enough to compete with Amazon's Kindle HD and Google's Nexus 7, and if, in so doing it cannibalizes sales of its larger iPad. If the iPad is sold at a lower price, would that hurt Apple's profit margin?
Another analyst is less negative. Daiwa Capital Markets analyst Christine Wang believes a smaller tablet could help Apple broaden its product portfolio and stay competitive in the increasingly crowded market. She expects Apple's iPad mini to sell for a lower prices than the current iPad and believes it will appeal to consumers who find the current iPad too heavy or too expensive. "Many people use the iPad to play games and watch videos, but they cannot hold it with one hand," Wang told the Wall Street Journal.
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