Why Is iPad Mini Cannibalizing the Original iPad?

The market has shown its hand in favor of the second-generation iPad Mini over the original iPad and it could force other tablet vendors to drop their prices as well, according to J.P. Morgan analyst Mark Moskowitz.

On Thursday, Moskowitz noted that this year’s tablet sales forecasts would increase due to the expanding popularity of the iPad Mini and other low-cost tablets. He also estimated that tablet unit sales will increase by 65 percent this year, more than a 10 percent uptick from the year previous. Overall, he believes that tablet revenue will grow to 33.2 percent, up from a previous projection of 32.5 percent.

So what about Apple’s competitors?

Moskowitz is convinced that Apple has the upper hand when it comes to a low-cost tablet due to the fact that other competitors have yet to build something as “compelling” as the iPad in the current marketplace.

“In our view, 2013 will be important for the laggards because Apple’s iPad Mini, particularly when the second generation is launched, stands to drive other vendors to even lower price points,” Moskowitz said. “We expect sub-$199 price points to be reached this year by other vendors, but we are skeptical the feature sets will be able to establish a sustainable sales pipeline.”

In the past few months, Apple is gearing up production of the iPad Mini to meet its growing demand. In fact, the Cupertino-based company is projected to ship out 55 million units this year, up from 40 million. Unfortunately, those projections eat away at the original iPad sales. According to Digitimes, Apple has rolled back its shipments on the 9.7-inch iPad from 60 million to 33 million in 2013. In total, the tech giant is projected to ship out just 88 million units between the two tablets in 2013, down from the 100 million reported earlier in the year.

It’s not just Apple who is creeping up on itself. In a note to investors, Moskowitz said that he believes Android will make a push for the tablet market share by expanding its roster while Google will see an uptick in revenue as it rolls out its new low-cost Nexus 7. But for now, Apple still remains the comfortable leader in the tablet market space.

[per: CNET]

image credit: macrumors.com