iPad mini won't upset low-end market - analysts

REUTERS - Apple Inc'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 Inc's(AMZN.O) Kindle, analysts said, in a muted reaction to the new tablet. Only a few analysts revise their price targets for Apple's shares ahead of the company's quarterly results announcement on Thursday. The shares were flat at $615 in morning trade on the Nasdaq. Canaccord Genuity raised its target on the stock to $800 from $797, while Barclays Capital cut its to $800 from $810. The 7.9-inch mini version of the iPad has most of the functions and features of the full-size $499 iPad but is cheaper by $170. However, the $329 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 (AMZN.O) Kindle Fire and Google Inc's (GOOG.O) Nexus 7, which have prices starting in the $159-$199 range. 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 $99, with many starting in the $199-$249 range," Barclays Capital analyst Ben Reitzes said. His new price target of $800 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 cannibalize iPad and iPod Touch sales," Walkley wrote in a research note. Despite the cannibalization, 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 orderbook, he said. (Reporting by Sruthi Ramakrishnan and Supantha Mukherjee; Editing by Rodney Joyce and Sreejiraj Eluvangal)

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