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Why the iPad Mini Drew Smaller Crowds

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Should investors really worry about cannibalization caused by the iPad Mini?

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MINYANVILLE ORIGINAL Apple launched its iPad mini today in 34 countries, but the lines of Apple enthusiasts outside the stores were noticeably shorter than during past product launches; in some stores employees outnumbered customers.

Piper Jaffray
analyst Gene Munster counted the number of individuals waiting in line for the tablet as he normally does on the date of an Apple product launch. At the Fifth Avenue store in Manhattan, he counted 580 customers (despite Hurricane Sandy) in line compared to the 750 who waited for the iPad 3 released last March. Other stores around the globe also had lower numbers.

Is Apple losing its appeal?

Probably not. Munster points out that Apple directed this product launch towards a smaller market and highlighted two reasons for the shorter lines.

First, the iPad minis launched today only supported Wi-Fi connectivity. The models with connectivity to 4G LTE networks will launch later in the month, so stores only rolled out half of the product line today. Second, competitors Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG) have already crowded the smaller tablet market with the $199 Kindle Fire HD tablet and $199 Nexus 7 tablet. Apple's 7.9-inch tablet has to compete in an existing market at a starting price of $329.

Furthermore, Apple stores began selling the iPad 4 today, so customers can choose from two different tablet models rather than one, further diluting the demand for the iPad mini.

Munster predicts that Apple will sell between 1 million and 1.5 million iPad mini units this weekend. Though off to a slow start, he sees the iPad mini becoming more prominent "over the next two to three quarter."

AppleInsider reported that Shaw Wu believes the iPad mini will do well when competing against Microsoft (NASDAQ:MSFT) Surface tablets.
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The author has a position in Microsoft.
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