Rumored iPad mini could make a splash
The $200 tablet has become a niche market -- and Apple may be looking to compete in it.
According to one report, an iPad with a smaller screen is undergoing tests. We believe a smaller and cheaper iPad could be a good strategy and would help Apple compete with low cost tablet vendors like Amazon (AMZN).
The iPad accounts for about 13% of our $550 price estimate for Apple stock. Our price estimate is about 5% above the current market price.
Companies like Amazon and Research In Motion (RIMM) have introduced lower-priced tablets to challenge Apple in the tablet market. Amazon's Kindle Fire costs $199, and RIM slashed its basic tablet pricing to $199 a few weeks ago. The $200 tablet has become a niche segment, and Apple might introduce an iPad mini to specifically target it.
We believe the iPad 3 will be a high-performance iPad with new features like voice-recognition service Siri -- presently an important element in the iPhone 4S -- and a high-resolution screen. Both an iPad mini, though unconfirmed, and the iPad 3 would ensure Apple's continuous dominance in the tablet market and may provide a trigger to Apple's stock as more information emerges.
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