Skip to main content
Welcome to
super saver spring
offer ends april 20
save over $140
save over 85%
$0.99
per week for 24 weeks
Welcome to
super saver spring
$0.99
per week
for 24 weeks
// //

Apple is taking the tablet fight to Amazon. The Cupertino, Calif.-based tech company's new iPad Mini takes it closer to the price point for the online retailer's devices. The new hardware rivalry could pressure Amazon into price cuts.

Investors didn't seem to see it quite that way. They knocked some 3 per cent or about $20 billion (U.S.) off Apple's market value despite a slew of product updates and the unveiling of the smaller iPad on Tuesday afternoon. Perhaps at an entry-level $329, Apple's widely anticipated new product wasn't seen as competitive enough with Amazon's $199 Kindle Fire HD.

Yet the iPad Mini with its 7.9-inch screen is far cheaper than the full-size 9.7-inch iPad, which starts at $499. The higher-quality finish could easily tempt quite a few users away from Amazon into Apple's ecosystem. At first glance, that seems more likely than too much cannibalization of the company's own larger model.

Story continues below advertisement

The threat for the retailer is to its content sales. Analysts don't think Amazon can be generating much profit from hardware. Instead, it is counting on selling lots of e-books, apps and physical goods through its Internet store. If the iPad mini starts eating into that, the company may have to cut prices on its gadgets.

That said, Amazon is only projected to sell about $8 billion-worth of tablets and content next year, according to Barclays, whereas Apple raked in more than that from iPads alone last quarter. The trick for Apple CEO Tim Cook is to maximize cannibalization of competitors' products and minimize the damage to the company's own offerings.

Though it's a new category of device for Apple, it may be impossible to avoid some erosion. And profit margins on the iPad Mini could be slimmer than the company is used to. Moreover, iPads generate about 65 per cent more content revenue per user than iPhones, according to Barclays research. If that's largely down to bigger screens, the iPad mini may bring Apple less extra sales than its big brother does.

Yet Apple's problem is much nicer to have than Amazon's: Incremental sales at slightly reduced margins are far preferable to lost revenue. Apple may be filling in its product line rather than conjuring new ones like it did with the iPhone and iPad. But it's Amazon that is on the back foot.

Your Globe

Build your personal news feed

  1. Follow topics and authors relevant to your reading interests.
  2. Check your Following feed daily, and never miss an article. Access your Following feed from your account menu at the top right corner of every page.

Follow topics related to this article:

View more suggestions in Following Read more about following topics and authors
Report an error
Tickers mentioned in this story
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

If you do not see your comment posted immediately, it is being reviewed by the moderation team and may appear shortly, generally within an hour.

We aim to have all comments reviewed in a timely manner.

Comments that violate our community guidelines will not be posted.

UPDATED: Read our community guidelines here

Discussion loading ...

To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies