SAN JOSE, Calif. - Apple Inc. gave fans the mini-moment they had been waiting for Tuesday by introducing a smaller iPad to the world, but the company surprised the technology community by also updating the standard iPad with a fourth-generation iteration just seven months after its last update.
The smaller device will officially be called the iPad Mini and cost $329 and up, pricey when compared with popular 7-inch tablets like the Kindle Fire and Nexus 7, which start at $199. The iPad Mini will have a screen slightly smaller than 8 inches - the original iPad has a screen just under 10 inches - while having the same resolution of the larger version.
The updated larger iPad was a surprise because Apple usually waits at least a year to introduce new iterations of popular consumer devices, and the third-generation iPad was launched in March. The new full-sized iPad will double the speed of its Wi-Fi connection and receive the new Lightning connector, the smaller connection introduced on the iPhone 5 last month, Apple marketing guru Phil Schiller announced slightly less than an hour into Tuesday's event.
Apple will continue to offer the iPad 2 and the iPad introduced Tuesday, effectively killing the third-generation iPad introduced just last spring.
After introducing the fourth-generation iPad to the audience, Schiller turned his attention to the iPad Mini, using Google's Nexus 7 tablet as a comparison. Schiller pointed out that the 7-inch tablet produced by the Mountain View, Calif., search giant is heavier and thicker than the iPad Mini, but still has a smaller display.
Schiller also said that all 275,000 iPad applications will work on the new, smaller iPad, while the Nexus 7 tablet that runs on Google's Android operating system offers "phone applications (that have been) stretched out."
The iPad Mini's starting price of $329 is $30 more than the iPod Touch, a similar product the size of an iPhone, and $70 less than the starting price of the iPad 2, which Apple continues to sell. The $329 model is Wi-Fi-only and offers 16 gigabytes of space, with models at 32 GB costing $429 and 64 GB for $529; the device is available for purchase online immediately, with a launch date of Nov. 2. Models with cellular connectivity start at $459, and will launch two weeks later.
Apple CEO Tim Cook, dressed in a blue shirt and black pants instead of the black-shirt-and-jeans combination made famous by late Apple co-founder Steve Jobs, began the event by lauding the recent updates to Apple's ecosystem and the adoption by its fervent fans.
The first actual update Cook announced regarded iBooks, Apple's marketplace for electronic books, which Cook noted has 1.5 million books available and has sold 400 million to customers worldwide. IBooks 3.0 will be a free download and include continual scrolling - negating swipes to turn pages - and new sharing options for Facebook and Twitter. Cook also later announced new iBooks authoring software, iBooks Author, available Tuesday.
Cook then ceded the stage for the first time to Schiller, who introduced a smaller version of a popular Apple product - but it wasn't the iPad. Apple will begin offering a 13-inch MacBook Pro with retina display, after previously only offering a 15-inch model with the high-resolution screen technology. The 13-inch model will be 20 percent thinner and a pound lighter than the previous 13-inch MacBook Pro, with a screen resolution four times greater, but no optical drive. The new MacBook Pro will cost $1,699 and up, $500 more than the previous iteration of the 13-inch MacBook Pro, and begins shipping immediately.
Schiller then introduced a new Mac mini, with a joke: "You knew there'd be something named mini in this presentation." The small desktop computer base will receive stronger Intel processors while keeping the same price.
Apple's vice president of marketing then moved to a new iMac, Apple's all-in-one desktop model, which will be 80 percent thinner than its predecessor while also losing the optical drive, but does not have a retina display.
Apple will also introduce a "Fusion Drive" for use with its Mac mini and iMac desktop models, which will combines 128 gigabytes of flash storage and a hard drive with 1 to 3 terabytes of capacity. The new iMac will start at $1,299 for the 21.5-inch model and $1,799 for the 27-inch model.
Cook then returned to the stage for the most-anticipated introduction of the day, the iPad Mini. Once famously derided by Jobs as a loser of a concept, a lower-priced and smaller-screened tablet from Apple gives the Cupertino tech giant a way to protect its flank from rivals Google and Amazon, which are nipping at its heels with their $199 devices.
"This is huge," Akash Agarwal, head of business development for mobility at SAP Mobile in Palo Alto, Calif., said while waiting for the doors to open outside the theater Tuesday morning. "Size really matters from a business perspective, and a smaller iPad will really open up markets for Apple. You'll see these things in kids' backpacks, in purses and at construction sites and fast-food places, where a smaller device makes a lot more sense."
Charlie Quong, a director of product development for Mophie, a Southern California company that makes charging cases for iOS devices, drove up for the show and agreed with Agarwal's thoughts on enterprise uses for the device.
"We'll definitely be making charging cases for the new device, and we expect to see it used in more and more business transactions," he said. "We make a reader that scans bar codes, and we'll see more and more applications like that, and the Mini could capitalize on that trend."
Global Equities analyst Trip Chowdhry was not as kind in his thoughts on the event, saying in an email not long after it ended that "Innovation at Apple is over."
"The best is over for Apple. IPad Mini is playing catch up to Google Android, probably will have a mediocre customer adoption," Chowdhry said.
IHS iSuppli reported Tuesday morning that Apple's introduction of a smaller tablet would nearly double the market for tablets in the 7-inch range both this year and next year. After the Kindle Fire drove sales of smaller tablets to 17 million in 2011, 34 million devices will be sold this year and another 67 million will fly off shelves in 2013, the independent analysis company reported.
"Just as Apple has dominated the market for 9.7-inch tablets with its iPad, iPad 2 and new iPad models, the company is poised to rule the market for 7.x-inch products, driving rapid growth of the segment in 2012 and 2013," IHS researcher Rhoda Alexander said in a news release, adding that demand for the product is especially strong in Asia.
The price of the device was higher than many analysts expected - a consensus guess of $249 circulated on the Web, as analysts believed that price offered buyers a presumably sexy alternative to other similar devices as well as a way to connect with other devices within the Apple integrated ecosystem. The challenge in entering the scaled-down tablet market, said analysts, is to price the iPad's younger, pint-size sibling in such a way that it helps push profits and growth but does not send cost-conscious buyers to less expensive devices like the Kindle and other products.
It's a balancing act for Apple because this competing crop of easy-to-carry mobile devices have been improving dramatically with each new iteration while still selling for break-even prices as little as $159 in the case of the Kindle Fire. The latest iPad, by contrast, starts at $500.
"Our expectation is $299 or lower" for the Mini, analyst Amit Daryanani with RBC Capital Markets told the San Jose Mercury News this week. "The whole point is you want to have it low enough to hopefully leverage the price elasticity. So with a $50 education discount, for example, you could sell it for $249 to students, which is half the price of the iPad."
Apple's last big product launch was the iPhone 5, and the Cupertino, Calif., company sold 5 million of those devices in the first three days of availability, a record for an Apple product launch. Analysts expected even bigger sales numbers, however, and blamed reported production delays by Apple, which helped send the company's stock down 13 percent from the launch date of Sept. 21 through the end of last week.
