Tech Industry

iPad Mini could hurt PC market, says analyst

As tablets bite off more sales from PCs, the iPad Mini may ramp up that trend, especially among "price-sensitive" buyers, according to a J.P. Morgan analyst.


Apple's iPad Mini is likely to steal more sales away from the weakening PC market, says J.P. Morgan analyst Mark Moskowitz.

"In our view, the iPad Mini stands to target price-sensitive users and the e-reader crowd," Moskowitz said in an investors note today. "Given the global economic uncertainty, we think price-sensitive users could gravitate toward an iPad Mini instead of making a PC purchase."

In difficult economic times, consumers opt for "feel good" purchases, said the analyst, giving the edge to the iPad Mini and other tablets over PCs. Further, consumers are expected to refresh their smartphones and tablets two or three times before they buy a new computer, which means the life of your average PC could drag out from four or five years to six or seven years, Moskowitz noted.

So, just how much would "price-sensitive" consumers have to shell out for the smaller iPad?

The latest scuttlebut suggests a price tag of $330 for the entry-level model. Previous reports have pointed to a price as low as $249, a figure echoed by Moskowitz.

"Our research indicates that the smaller size, absence of Retina display, and less storage capacity underpin the base model's potential price point of $249," he said.

Some analysts, such as Piper Jaffray's Gene Munster, have raised concerns that the iPad Mini could eat into sales of its bigger and pricier brother. But Moskowitz doesn't see that as an issue. Apple has been fairly savvy in the past about pricing new devices to avoid the cannibalization of current products, he noted.

Apple has typically relied on the iPhone for its core profit margins. The flagship phone likely accounts for two-thirds of the company's profits, according to Business Insider.

The iPad is responsible for only around 10 percent to 15 percent of total profits. But that situation could change down the road, said Moskowitz.

The iPhone 5 will still drive profits over the next 12 to 18 months, especially if China Mobile gets custody of the phone. But beyond that timeframe, the iPhone's growth may start to slow, according to the analyst. As such, the iPad and iPad Mini may need to bear more of the burden of generating earnings.

Finally, Apple will likely roll out the iPad Mini at a much slower pace than it has the iPhone 5, Moskowitz said. The small tablet could reach North America, Europe, the Middle East, and Africa in November and December, followed by the Asia-Pacific region in mid-December.

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