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Reaction to Apple's Reveal of the iPad Mini

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Analysts and investors worry about the iPad mini's price.

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MINYANVILLE ORIGINAL Apple officially announced the iPad mini today in San Jose, California. The iPad mini will have a 7.9-inch display and supports either Wi-Fi only connectivity or both Wi-Fi and LTE wireless connectivity. The basic model has a price tag of $329, and it carries 16GB in storage and has Wi-Fi only access.

Customers can begin pre-ordering the the tablet this Friday, the same date as the Microsoft (NASDAQ:MSFT) Surface RT tablet launch. It will be available starting on November 2.

Reaction to the iPad mini Announcement

A report from IHS iSuppli today (via Mashable) states, "The arrival of the smaller iPad will turbocharge the market for 7-inch tablets, helping the market to approximately double in 2012 and 2013." Specifically, IHS predicts 2013 will see sales increase by 96% from 34 million in 2012 to 67 million tablets.

If tablet providers sell 34 million units globally in 2012, total sales in 2012 will increase by 100% from 17 million in 2011.

However, when the price of tablet was announced, Apple shares dropped, and the company has finished the day down $20.64, or 3.26%, at $613.39 per share.

According to the Wall Street Journal, the $329 price for the basic 16GB version of the tablet caught some investors and analysts by surprise.

Bill Kreher, senior technology analyst at Edward Jones, expected a price of $299. He had hoped that Apple would price it more competitively with Amazon's (NASDAQ:AMZN) Kindle Fire HD tablet and Google's (NASDAQ:GOOG) Nexus 7 tablet.

Abhey Lamba, an analyst at Mizuho Securities, shared similar sentiments, stating, "[T]he $329 price point has left room for competitors to deliver alternatives."

According to Bloomberg, Erik Gordon, a professor at the University of Michigan, said, "At $329, it won't draw people from Kindles and Nooks."

Others are not as concerned about the price, though.

Shaw Wu, an analyst at Stern Agee & Leach, said in the same Bloomberg article that the price of $329 was expected, but anticipated that others may have expected a lower price.

In a Reuters report, Alex Gauna, an analyst atJMP Securities, said, "The pricing isn't a surprise, and that's a bad thing for the stock right now. It's coming in the range that most were grumbling about and that quite frankly we're a little bit concerned about."

Reuters also quoted Shannon Cross, an analyst at Cross Research, who praised the iPad mini saying, "Definitely think they have another hit on their hands." He believes Apple's wide variety of price points will appeal to many different customers.

Analysts also had mixed reactions to the features and specifications of the iPad mini.

The Wall Street Journal also reported that some investors continue to worry if "Apple is losing some of its edge as a trendsetter." Similar worries surfaced with the launch of the iPhone 5. Will Power, senior analyst with Robert W. Baird & Co., said, "That is the secret sauce of Apple, and if they don't stir that, that is going to create problems."

Others still think Apple can continue to drive sales despite the lack of groundbreaking innovation. The same article cited Mark Rolston, chief creative officer for San Francisco-based design firm Frog Design, who still has faith in Apple's ability to sell the tablet because of "Apple's focus on software and functionality and marketing."

However, he doesn't "think that people will be that impressed" with the hardware of the iPad mini. He also said, "They took the phone and made it bigger or the tablet and made it smaller and neither is really the right idea."

Gizmodo posted a good comparison of the iPad mini to other tablets in its league. The iPad mini is more expensive, but some of its features lag behind those of its competitors. Its resolution is only 162 ppi; both Amazon's Kindle Fire HD and Google's Nexus 7 sport a ppi of 216 ppi while Barnes & Noble's (NYSE:BKS) Nook boasts the highest resolution at 243 ppi.

The new tablet will also use the older A5 chip, first used in the iPad 2.

Gizmodo highlights the benefits of the large app ecosystem existing for iOS. Apple CEO Tim Cook emphasized today the 275,000 apps in existence specifically for the iPad. Android has just a few thousand, and developers usually produce an app for iOS first before making them for Android or Amazon.

The article points out, though, that this may be one of the few benefits of the higher price, other than the access to LTE networks. Gizmodo said when potential customers consider buying the tablet, "It will likely come down to how invested you are (and how invested you want to be) in the iOS system.

You can view Gizmodo's chart comparing the competing 7-inch tablets here.

Twitter: @ChrisWitrak
The author has a position in Microsoft. s in stocks mentioned.
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