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Google's Nexus 7 could force Apple's hand on 'iPad Mini'

Gregg Keizer | June 28, 2012
Google's new Nexus 7 tablet may be aimed more at Amazon and its Kindle Fire than Apple and its iPad, but Apple will not be able to ignore the low-end of the tablet market dominated by 7-in. devices, analysts said today.

"Between the Fire and the Nexus 7, 10 to 12 million of these will be in people's hands by the end of the year," said McQuivey. "That will pale in comparison with the iPad numbers, but Apple will start to feel it."

In 2011, the iPad had a commanding 59% of the global market in tablets, according to IDC. Amazon, by comparison, accounted for just 7% of all tablet sales. Projections by McQuivey's Forrester pegged iOS's share of the tablet market during 2012 at 68%, with Google's Android -- which powers both the Kindle Fire and the Nexus 7 -- at 16%.

By 2016, iOS's share will have dropped to 53%, Android's will have fallen by half to 8%, and Windows-based tablets will account for 18% of those sold, said Forrester.

None of the analysts queried today by Computerworld expect Apple to compete with Google -- or Amazon either -- on price in the 7-in. market. Instead, the company will continue to position its products, whatever they may be, as premium devices priced accordingly.

"They will take the premium part of that market and be happy with it," said Gottheil. "They won't settle for margins that they feel are unacceptable. So I don't think they'd come at the Fire and Nexus 7 on price. They will want to retain their premium position."

McQuivey agreed. "Apple would never dare to compete on price," he said. "They will either subsidize the device -- I think they may create an iTunes subscription service, but that requires them to get additional rights to content, which they have had trouble doing at times -- or price it in the $300 range."

Both Gottheil and McQuivey pointed out that a $300 price for an iPad Mini would fit nicely with the price structure Apple now has for the iPad, which runs from $399 for the iPad 2 to $829 for the highest-priced 64GB iPad that supports both Wi-Fi and cellular connections to the Internet.

Other analysts have previously argued that a smaller iPad would "crush" tablet rivals like Amazon.

Gartenberg wouldn't speculate on an iPad Mini or Apple's response to the Nexus 7. But he made an interesting observation.

"It's certainly easier for Google to compete against an Apple product that doesn't exist," Gartenberg.

That, he continued, seems to be a theme lately.

"The impression is that Microsoft is going after Google with its Surface," said Gartenberg, referring to last week's introduction of 10.6-in. tablets running Windows RT or Windows 8 Pro. "Now Google seems to be taking on Amazon with the Nexus 7. No one is wiling to take on Apple, which is probably smart."


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