We know from rumor and from the Apple-Samsung trial that Cupertino is working on a 7-inch tablet, possibly for introduction in Q4 this year. However if it fails to offer one it will cede that potentially significant market to Google and Amazon — and possibly Samsung.
The question, however, is how to introduce a smaller device, price and market it so that it doesn’t cannibalize iPad sales (or iPod Touch sales for that matter). As a competitive matter, it would have to be priced at or below $250 and a entry level version would probably need to be priced at or below $199.
It’s worth noting that the entry level price for the current iPod Touch is $199. It’s likely that a majority of iPod Touch sales over time will be lost to 7-inch tablets (e.g., Nexus 7). So this is another reason for Apple to get into the 7-inch tablet game, even if it cannibalizes current iPod Touch sales.
The blog 9to5Mac believes the new 7-inch Apple tablet will be a larger iPod Touch, while Apple watcher John Gruber thinks it will be more like a small iPad than the former. Regardless, the device needs to work for consumers and developers and be priced right.
It makes some sense to me to position the new tablet as a larger iPod Touch but there’s probably more marketing bang to be had from calling it an iPad. The iPod Touch is perceived as a device for kids or those without an iPhone. There’s more “sex appeal” in the iPad category.
It’s probably unlikely that a 7-inch Apple tablet would significantly cannibalize iPad sales. The larger screen makes a difference across a range of apps and experiences (e.g., video). And people will want that. But there’s a balance and a pricing dilemma for Apple.
The iPod Touch is the only iPod category that’s growing. Conventional iPods are declining in sales. Apple in part uses the iPod Touch as a way to “acculturate” kids and others to the world and ecosystem of the iPhone. It’s a strategic product.
However, for most people (and certainly gamers) a larger iPod Touch would be welcome. But at $199 a 7-inch Apple tablet would likely kill the current iPod Touch unless the price of those devices were dropped to a range of $149 (or less) to $299.