Wedge predicts iPad to follow iPhone strategy

Wedge Partners analyst Brian Blair doused investor expectations of a 7.85-inch mini iPad with an update on Friday. He believed Apple had been testing seven-inch tablets for "over a year," but he didn't expect Apple to release one of the kind in 2012. While not claiming inside knowledge, he instead reckoned that Apple would follow the iPhone strategy of preserving an older model and keep the iPad 2 on the market, just at a lower price.

"We believe iPad 2′s price could drop to the $349 to $399 range with Apple offering a single 16GB model," Blair said.

The cheaper model would be used to catch those in the "mid-tier," or tablets between $249 and $499. It would help mute demand for both discounted full-size Android tablets as well as the Nook Tablet and others that skirt the edge of the mid-range category.

Apple had the price advantage over comparable rival tablets for all of 2010 and much of 2011, with many either costing as much or only slightly less for similar features or else having prices that were actually higher than an equivalent iPad, such as the HTC Jetstream's $850 price or the initial $800 cost of the 3G Motorola Xoom. Pricing for many tablets might be more competitive in 2012, however, and Apple may want to close as much of the price gap with the $199 Amazon Kindle Fire as possible.

The rumored 7.85-inch iPad might not show until later in the year but would be a more direct hedge against Amazon and Barnes & Noble. Late Apple CEO Steve famously savaged small tablets, saying they were too small to fully realize the software and create enough of a difference over a smartphone.

By Electronista Staff