Apple Inc will host an event on Oct. 23, where it is expected to unveil a smaller iPad that will take on the less expensive devices offered by Amazon.com Inc and Google Inc, a source said on Friday.
Wall Street analysts have predicted for months that Apple was planning a smaller, less costly version of its popular iPad to take on cheaper competing devices, a move that analysts say might hurt its margins, but will prevent its rivals from dominating an increasingly important computing segment.
The source did not specify what the product would be and an Apple spokesman declined to comment, but technology blog AllThingsD reported earlier on Friday that Apple would launch the mini iPad at the event.
The device is expected by many experts to have a screen of between 7 and 8 inches (18 to 20cm) in size.
A smaller iPad will directly compete with e-commerce company Amazon’s Kindle Fire HD tablet and Google’s Nexus 7. Both devices have 7-inch screens and sell for US$199.
The first Kindle Fire, launched last year, grabbed about a fifth of the US tablet market.
The consumer device company is gearing up to unveil a new product at a major event on Oct. 23, said the source, who declined to be named, only days before Microsoft Corp unveils Windows 8 and its new Surface tablet on Oct. 26.
The Nexus 7, manufactured by Asustek Computer Inc (華碩電腦), has also seen a successful start, with the tablet selling out soon after launch.
One Wall Street analyst said he had seen the smaller tablet, dubbed the “iPad mini” by the media, while visiting component suppliers in Asia.
“We actually had the opportunity to play with a pilot iPad Mini used by one of the vendors,” Topeka Capital analyst Brian White said. “This 7.85-inch iPad Mini fit our hands like a glove and we were easily able to tuck the device in our sport coat, offering consumers a more mobile iPad experience for certain use cases.”
Apple events are typically among the most-watched items on the industry calendar, monitored by consumers and technology investors alike. However, the event in two weeks comes at a time of volatility for the popular technology stock.
Apple earned gross margins of 23 percent to 32 percent on its US iPad sales between October 2010 and the end of March, a court filing by Apple in a recent patent trial against Samsung Electronics Co Ltd revealed in July.
The company’s margins on US iPhone sales are almost double those on the iPad, averaging between 49 percent and 58 percent.
Sterne Agee analyst Shaw Wu said that if Apple prices the smaller tablet between US$299 to US$349, it could maintain the current margins.
“The biggest cost in a tablet is the display,” he said. “On a mini, the display will be a bit cheaper.”
If the tablet is priced below US$299, Apple could still maintain a decent margin if it offers 8 Gigabytes of storage instead of the minimum 16 GB storage it has in the current iPad, Wu added.
A mini version of the iPad marks a departure for the company that now has just one 9.7-inch iPad, although it does come with various storage options and starts at US$499.