Is Apple finally playing catch up?

As the iPad mini hits New Zealand, Adam Leach, principal analyst at Ovum provides his view on Apple’s Strategy.

The rumoured smaller (7” – 8”), cheaper iPad marks a significant shift in Apple’s strategy.

For the first time in its recent history it is responding to market pressures from its competitors, namely Google and Amazon in bringing a smaller tablet to market.

Apple in the past has defined new products with new form factors and waited for the market to follow, in this instance Apple is following the market trend towards smaller cheaper tablet form-factors.

This reflects a fundamental change in the way Apple operates, as it is assuming that a lower cost iPad will allow them to sell sufficiently more units to offset the dilution in ASP that a cheaper device is likely to cause.

Smart Tablet Market:

From a standing start in 2010, global shipments of smart tablets and other portable smart devices (PSDs) - i.e. those portable computing devices based on "smart" operating systems (OSs) that are not otherwise defined as smartphones or PCs - are expected to exceed 130 million units in calendar year 2012, rising to 349 million units in calendar year 2017.

This equates to a compound annual growth rate (CAGR) of 22 percent across the period 2012-17 making this the fastest growing category of consumer electronics ever.

The bulk of growth in shipments for smart tablets and other PSDs continues to arise from a combination of three main drivers:

* The first driver is as additional device sales on top of those for smartphones and PCs as "third devices" in high-penetration PC markets.

* The second driver is the use of tablets and other PSDs as primary computing devices in low-penetration PC markets, an opportunity that plays well to lower-cost tablet form factor devices.

* The third driver is smart tablets and PSDs as substitutes for segments of the PC market, primarily notebooks and netbooks, an opportunity that plays well to convergent devices based on Microsoft's Windows RT.

Much of the early growth of the tablet and PSD market has been attributable to the Apple iPad, a device whose sales Ovum estimates to represent 54 percent of the market in 2012.

The great majority of other tablet and PSD shipments in 2012 – 35 percent - will be of devices running variants of Google's Android OS.

These two platforms will be increasingly challenged by Windows RT through the forecast period.

Apple's new iPad mini was released in New Zealand this morning.