Apple, Facing Competition, Introduces a Smaller iPad

Philip W. Schiller, Apple's senior vice president of worldwide marketing, introduced the new iPad Mini

SAN JOSE, Calif. — Steve Jobs once mocked tablets with small screens, saying they would need to come with sandpaper so people could sand down their fingertips to use them. But that didn’t stop his company from shrinking the iPad. Apple’s iPad Mini, which it unveiled at a press event here on Tuesday, weighs about two-thirds of a pound and has a screen that measures 7.9 inches diagonally, making its surface area significantly smaller than that of the 9.7-inch iPad. Philip W. Schiller, Apple’s vice president for marketing, said the smaller, lighter tablet would be a good fit for people who want something more portable than the 1.44-pound iPad. The company is selling the lowest price Mini for $330, about $130 more than similar-size tablets from competitors. Apple also introduced an upgrade for its larger iPad, adding a faster processor and the Lightning connector that first appeared in the iPhone 5, and it showed new laptop and desktop computers. “The iPad is the top-selling tablet in the world, but we’re not taking our foot off the gas,” Timothy D. Cook, Apple’s chief executive, said at the event. 

The smaller iPad is a bit of a shift for the company. Mr. Jobs once said in a call with investors that 7-inch tablets from competitors like Samsung and Research in Motion were “tweeners” that were too big to compete with a smartphone and too small to compete with an iPad. But with all the action in the tablet market lately, smaller models have become impossible to ignore. Google, Apple’s fiercest competitor, recently released its 7-inch Nexus 7 tablet for $200. Amazon recently introduced seven new Kindles, including a 7-inch tablet for $160 and an 8.9-inch tablet for $300. Barnes & Noble’s Nook tablet, which starts at $200, has also sold well. Combined, the three companies have sold about 15 million of these smaller, cheaper tablets, according to estimates by Forrester Research.

Apple recognizes that it has competition. At the news conference, Mr. Schiller made a side-by-side comparison of the iPad Mini and a Google Nexus 7. He said the Mini was thinner, lighter and more durable than Google’s tablet, and still had a bigger screen. 

“Others have tried to make tablets smaller than the iPad, but they’ve failed miserably,” Mr. Schiller said while showing images of apps running on the Nexus 7 and the iPad Mini. He noted that the iPad Mini had access to Apple’s catalog of 275,000 apps that have already been made for iPads. Most of the 500,000 apps in Google’s Android app store are designed for phones, not tablets. Apple still dominates the tablet market; it announced that it had sold 100 million iPads to date. But it might have sold 15 million more if it had put a smaller, cheaper version on the market earlier, said Sarah Rotman Epps, a Forrester analyst. “Rather than cede the low end of the market to Amazon and Google, they’d prefer to take it themselves,” Ms. Rotman Epps said. “Apple is smart to be acting before it gets to be more of a problem.” 

Ms. Rotman Epps said the iPad Mini could appeal to women because it can more easily fit in a purse. It may also have better luck than the larger, more expensive iPad in developing countries like China, where iPad demand has been low compared with demand for cheaper Android tablets. The iPad Mini’s components are on par with those of Apple’s other mobile devices: it includes the Lightning connector and a five-megapixel camera. The smaller tablet does not, however, have the high-resolution Retina display of its bigger counterpart, presumably to keep it thinner and lighter. The new iPads will begin shipping Nov. 2, and the version with a cellular connection will ship two weeks later. Apple also introduced a family of new Macs on Tuesday, including upgrades for the MacBook Pro, iMac and Mac Mini. The 13-inch MacBook Pro notebook now includes a Retina display, which Mr. Schiller said had twice as many pixels as a high-definition television. The iMac is 80 percent thinner and eight pounds lighter than the previous model. 

The larger fourth-generation iPad comes about seven months after Apple introduced the last version — an unusual move, as the company has traditionally waited a year before upgrading products. But this timing allows Apple to market its tablets during the holiday season. Apple’s stock dropped 3.3 percent to close at $613.36. Shaw Wu, an analyst with Sterne Agee, said investors were mostly disappointed by the iPad Mini’s price, as some had hoped it would be closer to the prices of Google’s and Amazon’s tablets. But Mr. Wu noted that in general, Apple does not try to drive its products down to the lowest price, possibly sacrificing quality. Unlike Amazon and Google, Apple is driven by profits from hardware sales, not content, so Mr. Wu said he expected the iPad Mini to generate solid margins. 

“It’s like Mercedes and BMW,” he said. “Will they go lower than Honda or Toyota? Probably not.” He added that Apple’s strength was its universe of apps, books and music, and that neither Google nor Amazon had all of those bases covered.