Apple Tests Smaller IPad to Compete with Lower-Cost Tablets

Apple Tests Smaller IPad to Compete with Lower-Cost Tablets

Apple is testing a reduced-sized iPad, in a move to compete with the rising success of smaller, low-cost tablets from its competitors.

The Cupertino, Calif., company is showing suppliers in Asia iPad designs featuring an 8-inch screen, which is 1.7-inches smaller than the iPad 2, according to anonymous sources who spoke to The Wall Street Journal.

Other suppliers offering alternative options to iPads are finding success with consumers on a budget, and the product designs suggest Apple is following suit.

Apple’s smaller iPad could compete with a number of tablets that hit the market after its original tablet. For example, Samsung’s Galaxy line, which offers a variety of tablet sizes starting at $200, appeals to a wider consumer base who aren’t willing to spend on Apple’s higher-priced iPads.

The market has also seen the rise of devices from like the Kindle Fire and Nook Tablet from retailers like Amazon and Barnes & Noble, and the new testing could be in response to their devices’ success. Amazon’s Kindle Fire cut into iPad sales, no doubt in part to its $200 price tag. Apple’s iPad 2, however, starts at $500 for a 16-gigabyte model, or $630 for a model with 3G.

Still, those prices aren’t enough to take the iPad’s lead in the tablet market. Apple’s device represents most global tablet shipments at just over 61 percent in the third quarter of 2011, according to research firm IDC, but that was a slip from the 63 percent share earlier in the year.

The dip may account for Apple’s design considerations, but it’s not a major slip considering Samsung’s tablets trailed far behind with just over 5 percent of the global market share.

Opting to offer a smaller, more affordable iPad means Apple could recoup some of the customer base it lost to Amazon and Samsung. Offering options worked for Apple in the past; the iPod line, dominating the MP3 player market since its launch, features a variety of models ranging in cost starting as low as $50.

Rivals like Samsung aren’t standing still, however. The Korean company is forging ahead to compete with iPad and will soon debut the Galaxy Tab 2 as a direct competitor, taking advantage of the demand for tablets. For Apple, the increased competition puts pressure on developers to stay competitive and diversify its offerings.

As it looks for an edge in the lower-end tablet market, Apple’s iPad 3 comes out in March, with a similar size and higher screen resolution than iPad 2. With 4G LTE connectivity, pricing is likely to reflect the leading technology and keep its top perch in the high-end market, where cost is less of a consideration.

Though it’s the undisputed leader in the tablet market, Apple is thinking ahead on what it can offer, as other companies focus on how they can capture customers who shy away from Apple due to pricing. Sales and shipments suggest Apple’s features continue to win over consumers, but creating a smaller version of iPad may then help Apple target one of the differences its competitors have been able to capitalize on — affordability.

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