Apple's iPad mini will attract new customers but the higher-than-expected price is unlikely to make it a threat to low-cost tablets such as Amazon.com's Kindle, analysts said, in a muted reaction to the new tablet.
iPad mini joins the competitive tablet market
Apple introduces a smaller, cheaper version of its popular iPad, the iPad mini, available to pre-order in Australia on the 26th of October from $369.
Only a few analysts revise their price targets for Apple's shares ahead of the company's quarterly results announcement on Thursday (US time). The shares were flat at $US615 in morning trade on the Nasdaq.
Canaccord Genuity raised its target on the stock to $US800 from $US797, while Barclays Capital cut its to $US800 from $US810.
The 7.9-inch iPad mini has most of the functions and features of the full-size $539 iPad but is cheaper by $170.
However, the $369 price for the wi-fi only model was higher than many analysts had expected and some said the gadget might struggle to compete with the cheaper Amazon Kindle Fire and Google's Nexus 7, which have prices start at $US199 and $A249 respectively.
The device may also lure buyers away from Apple's flagship 10-inch tablet, they said.
"We were hoping the price would be at least a little lower given its competition is situated as low as $US99, with many starting in the $US199-$US249 range," Barclays Capital analyst Ben Reitzes said.
His new price target of $US800 is more in line with those of other analysts, although most targets are still well above Apple's current share price.
Demand for Google's Nexus 7 and Amazon's Kindle Fire is unlikely to be much affected by the launch of the mini given the significant price gap, Nomura Equity Research said.
On a positive note, the high price made it less likely that the device would eat into Apple's margins, the brokerage said.
Barclays estimated iPad mini sales at more than 5 million units in the December quarter, while Canaccord Genuity forecast sales of 9.25 million units during the three months. Apple sold about 17 million iPads in the quarter ended June.
The iPad mini will help Apple reach a new customer base that may not have been able to afford the higher-end version, Canaccord Genuity analyst Michael Walkley said.
"While we believe these strong sales will come largely at the expense of Apple's competition, we concede iPad Mini will likely cannibalise iPad and iPod Touch sales," Walkley wrote in a research note.
Despite the cannibalisation, the mini should greatly expand the market for iPads, whose sales have exceeded 100 million units in just two-and-a-half years after the tablet was introduced, Needham & Co analyst Charlie Wolf said.
Apple will enjoy a very happy holiday season on its refreshed product line and because of the "hopelessly backlogged" iPhone 5 order book, he said.