Is a Much Needed Apple Inc. iPad mini Upgrade Coming Soon?

According to Apple site Macotakara, a next generation Apple iPad mini 4 may be coming soon. The device will reportedly feature the A8 processor found inside the iPhone 6 series as well as 802.11ac connectivity, upgrades from the A7 and 802.11n connectivity in the iPad mini 3.

In other words, it might finally be the iPad mini that should have launched back in October 2014.

Why didn't Apple use the A8 in the iPad mini 3 to begin with?Perhaps a cynic might say that Apple did not include the A8 processor in the iPad mini 3, because it wanted to save something for a future device. That might be true, but I have an alternative explanation.

The A8 is built on aTaiwan Semiconductor20-nanometer process, which was pretty new when the iPhone 6 launched. I would not be surprised if, to ensure enough supply for its much higher-margin (and higher volume) iPhone 6 devices, as well as the higher-margin iPad Air 2, the company kept the iPad mini lineup on more mature technology.

Given how little Apple seems to value the iPad mini lineup these days, this would not be at all surprising.

If Apple waited on the A8, making other big upgrades would not make senseIf Apple was not able to upgrade the processor in the iPad mini 3 in the October timeframe, then it makes sense from a number of perspectives to just keep the fundamental platform the same and upgrade it later when A8 supply is freed up.

Not only did this route save Apple research-and-development effort and resources that were likely better utilized on future iPads, but it also makes sense from a manufacturing cost perspective. Component prices usually come down each year, and if Apple can use largely the same components as it did in the previous model but sell the device for the same price, margins improve.

A newer iPad mini could help overall iPad salesThe current iPad mini stack (16 gigabyte models) is priced as follows:

  • iPad mini- $249
  • iPad mini 2- $299
  • iPad mini 3- $399

The original iPad mini is slow, has a very low resolution display, no touch ID, and is not a particularly good value in tablets. The iPad mini 2 is much faster and has a better display than the original iPad mini, but even then it is probably on the pricey side. The iPad mini 3 is almost comically priced given that it is an iPad mini 2 with Touch ID.

I love Touch ID, but it is hardly worth $100.

If Apple introduces a new iPad mini 4 with the aforementioned features (and maybe an updated industrial design), then the new product stack could look something like this:

  • iPad mini 2- $249
  • iPad mini 3- $299
  • iPad mini 4- $399

This stack, in my view, would be significantly more attractive. It would give users clear reason to buy the top end model, while also offering reasonable values at lower price points. Although by no means guaranteed, this stack could help give iPad sales -- which have posted year-over-year declines for several quarters now -- a much needed shot in the arm.

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Ashraf Eassa has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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