“Apple Inc. (NASDAQ:AAPL) said the slew of new devices would be taxing. During a conference call last week, the company said its profit margins would shrink amid the increased costs of manufacturing the new devices,” wrote the Wall Street Journal. “The company added that new product designs often cost more to manufacture at first, but their cumulative effect is often tempered by a stagnated release schedule throughout the year.”
Granted, analysts had expected that Apple Inc. (NASDAQ:AAPL) iPad Mini sales would be lower on opening day. There are a few obvious issues, like the fact that the iPad Mini has a more narrow target audience than the iconic iPad. Also, according to the Wall Street Journal, “models being sold Friday won’t include chips that support high-speed cellular data. Those will arrive a couple of weeks later.” And these issues were reflected in analyst estimates – “Piper Jaffray estimates the company will sell 1 million to 1.5 million iPad Minis this weekend. That compares to three million of the new iPads when they went on sale in March. Apple sold 5 million units of the iPhone 5 in its first weekend of sales in September.”
While the true test of the Apple Inc. (NASDAQ:AAPL) iPad Mini will be this holiday season, there are a few other potential problems. For one, the iPad Mini is competing against tablets like Microsoft Corporation (NASDAQ:MSFT)‘s new Surface Tablet which was already named as one of Oprah’s favorite things for 2012. Oprah said of the new tablet, “The Surface, Microsoft’s first tablet, feels like a Mercedes-Benz to me, people! The full-size keyboard built right into the cover makes work easy, the very smart kickstand makes watching a movie or Skyping a friend a delight, the less than a pound-and-a-half weight makes a great alternative to a laptop, and the many other features make it fun for work and play. Now, that’s a wowser!”
The Apple Inc. (NASDAQ:AAPL) iPad Mini is priced about the same as Microsoft Corporation (NASDAQ:MSFT)’s Surface Tablet, for comparable builds, but the iPad Mini is less for a basic, no 3G model. The is that for customers who may be more price-driven, there are a variety of smaller tablets with lower prices, like Amazon.com, Inc. (NASDAQ:AMZN)‘s Kindle Fire HD which currently starts at $199. For more budget-conscious buyers, Amazon’s Kindle Fire HD may be more attractive. It still allows users to watch video, read books and surf the Internet, and it costs roughly half as much (Read about Amazon’s Ad Comparing the iPad Mini to the Fire HD). And all this is to say nothing of all the Nexus tablets Google Inc (NASDAQ:GOOG) is offering, which are priced just slightly over Amazon’s Kindle Fire. They are also presenting solid competition against Apple’s iPad Mini.
Again, holiday sales are going to be the “tale of the tape” so to speak, but today’s lukewarm Apple Inc. (NASDAQ:AAPL) iPad Mini sales may end up being just the start of another tablet war between the popular iPad maker, Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN) and Google Inc (NASDAQ:GOOG).
