Seven Inches

Ever since the iPhone was launched, the rumour mill has repeatedly predicted an “iPhone nano”:

China Times is among the first to bring purported news of a low-cost iPhone in the works this year, citing unnamed sources within Apple’s supply chain with its report. Apple is looking to expand expand its position in the low-end smartphone market according to China Times, and its $375 iPhone 3GS is too pricey to compete with entry-level Android smartphones.

Likewise, since the iPad was introduced, there have been rumours of it gaining a smaller cousin as well. Apparently it’s right around the corner:

The publication reported that LG and AU Optronics were certified to supply the LCD panel for the iPad Mini. Furthermore, it goes on to claim that both manufacturers are working to ship the panels for production and for a release sometime during the latter half of 2012. […]

Rumors of the iPad Mini have really ramped up over the last few months, because Apple is said to take on Amazon and other competitors with a smaller 7.85-inch offering priced cheaper for customers just entering the tablet market.

Leaving aside the dubious reliability of the “supply chain“, these rumours crop up year after year, and yet fail to surface. Can we expect an iPhone nano or an iPad mini in the future? We won’t know for certain until it happens, if it ever does, but there are two aspects of this thinking that I feel compelled to debunk.

The first problem is the notion that Apple feels it necessary to compete against cheaper products. This is nonsense. It’s easy to build products that are cheap, and it’s easy to build products that are overpriced. What isn’t as simple is maintaining a high manufacturing quality and a great user experience while also bringing the price down. Steve Jobs was very clear about this at the 2007 aluminum iMac introduction:

You’ll find that our products are not premium priced. You price out our competitors’ products, and add features that actually make them useful, and they’re the same or actually more expensive. We don’t offer stripped-down, lousy products.

Since the iPad was introduced, Android tablets have tried to compete with it on user experience and failed. If it competes with the iPad in performance, chances are that it costs more. If it costs less, chances are pretty good that it doesn’t attempt to compete. The new iPad is proof-positive of this: nobody out there is putting a 260 PPI, 10-inch display in their tablets for $499 right now. They don’t have the supply chain, and they don’t have the operations know-how.

Another way of estimating how a company will behave in the future is to look at its recent history. As the names of the hypothetical products suggest, this is the tactic of the rumour mill: they’re using the names of Apple’s iPod lineup as indicators of where their current major product lines will go.

This is fallacious from its roots. While there may have been an iPod at every $50 price point, these products were launched for distinct purposes, not to fill a gap in the market. The iPod shuffle is the cheap one for jogging. The iPod nano is the default model for most people who just want a music player. The touch is for those who want an iPhone-like experience without the phone, and the classic is for people with giant music libraries. Each product has its own function.

How would a 7-inch iPad, or a smaller iPhone differ from their larger siblings in a meaningful way? The answer is pretty simple: they wouldn’t. They would be filling gaps in the market, and that’s quite unlike Apple. But with 11, 13, 15, and 17-inch models, their line of laptops is an exception to this, which makes me think it would be possible in the iPad. I’m not convinced yet, though.

The iPhone seems to be going in the opposite direction: it’s getting bigger, not smaller. The previous generation iPhones naturally become the smaller models. This is the same strategy as they are applying to the iPad: sell the previous generation at a reduced price. Instead of developing brand new models with re-engineered components, they can keep the old product on the production line at an ever-decreasing cost. This product strategy is much more like Apple.