Reuters has confirmed that Apple will apparently seek to upstage Microsoft with an October 23rd special event during which the Apple iPad mini will be introduced. On October 26th, Microsoft is expected to unveil its line of Microsoft Surface tablets. According to Reuters, Apple's tablet with the 7.85 inch screen will be priced to compete with the low priced 7 inch Android tablets like the Amazon Kindle Fire HD and the 8GB model of the Google Nexus 7. Both of those slates are priced at $199.
In pricing the device at around the same price point where the low priced 7 inch Android tablets reside, Apple will be giving up some of its profit margin in order to defend its extremely high market share in the tablet market. A recent survey from IDC showed the Apple iPad with a commanding 68.2% of the global tablet market. During the recent patent trial with Samsung, Apple said that its profit margin on U.S. sales of the iPad ranged from 23% to 32% from October 2010 through March 2012. Considering that Amazon has said that it sells its $199 tablet at cost, there is not going to be much room for Apple to make money. This could be the beginning of a crack in the company's earnings that the bears on Apple's stock have been looking for. Apple's shares have recently tumbled from the $700 level hit after the release of the Apple iPhone 5 to the current price near $630, a 10% decline.
Sterne Agee analyst Shaw Wu says that if Apple prices the Apple iPad mini in the $299-$349 range, it will keep the same profit margins as it has with the larger version of the tablet. Even if it prices the tablet below $299, Wu says that the Cupertino based firm can still make a decent profit by limiting native storage on the device to 8GB instead of the 16GB on the larger model. The Apple iPad mini is rumored to be Wi-Fi only with Apple keeping data connectivity for its higher priced models.