iPad Mini Creates More Demand Than It Cannibalizes

Now that the iPad mini has arrived at market and is evidently selling well, there’s no doubt that the original iPad will suffer some cannibalization by its smaller sibling. But, according to a survey from Cowen and Co., it may turn out to be minor, if not outright inconsequential; better to eat your own than have your own eaten by others.

Prior to its launch, analysts and observers estimated the iPad mini’s cannibalization rate of iPad sales at between 10 percent and 20 percent, with some hazarding guesses of as high as 50 percent. And while those at the lower end of the spectrum might appear reasonable, consumer sentiment — as reported by Cowen — suggests they’re more than a bit high.

Of the 1,225 U.S. adults Cowen surveyed, 12 percent said they planned to purchase an iPad mini in the next 18 months, and of those, 52 percent said they’d never owned a tablet before. More interesting still, of the survey respondents who said they planned to purchase an iPad mini, just 16.6 percent said they intended it as a replacement for another device, and of those, 29 percent said the gadget to be replaced was an iPad (13 percent said that device to be replaced was a Kindle Fire, and 42 percent a Windows PC).

In other words, few consumers are buying an iPad mini as an iPad replacement. And, more importantly, for many buyers, the iPad mini is their first tablet. With the iPad mini, Apple isn’t wooing consumers who might have otherwise purchased a larger iPad, it’s jacking into an untapped market looking for a smaller version of the tablet it first uncrated in April 2010.

“The iPad mini creates more demand than it cannibalizes,” Cowen analyst Matthew Hoffman explained. “Since 52 percent of the mini intenders in our sample did not own a tablet of any type, we see it successfully positioned as likely to penetrate new entry-tier segments. … Mini will no doubt take some iPad “4” sales, but its low price also looks like an important tool to capture new consumers’ attention.”