Apple Inc. (AAPL), Google Inc (GOOG): Will the Next iPad Mini Get a Major Update?

Profit margins?
There’s no arguing Apple Inc. (NASDAQ:AAPL)’s decision to offer a competitive offering — it has to. Seven-inch tablets are a huge market, and it’s only expected to grow between now and 2017. But is the need for an accelerated road map evidence that Apple may continue to suffer further declines in gross profit margins? In October 2012, Apple CEO Tim Cook said that the iPad Mini had gross profit margins meaningfully below its corporate average. With major updates like this, will margins be pressured even further?

In particular, a tablet’s display typically comprises approximately 40% of the component bill-of-materials, so adding a Retina display may pressure margins. On the other hand, Apple Inc. (NASDAQ:AAPL) should be progressing down the cost curve with the iPad Mini since no major external redesigns are expected.

Or, will Apple Inc. (NASDAQ:AAPL) introduce two pricing levels — like they have with the Macbook Pro line (one level for MacBook Pros with Retina display, and one for those without)?

Either way, the verdict is clear: Competition is heated and an aggressive response is needed to fend off rivals in the small-tablet segment.

The article Will the Next iPad Mini Get a Major Update? originally appeared on Fool.com.

Fool contributor Daniel Sparks owns shares of Apple. The Motley Fool recommends Amazon.com, Apple, and Google. The Motley Fool owns shares of Amazon.com, Apple, and Google. 

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