TightWind is written by Kyle Baxter. Stay Hungry. Stay Foolish.

The number of rumors that Apple is working on a small, 7-8″ iPad have increased recently. DigiTimes posted another today.

I wanted to address the idea of a small iPad because I’m sure it’s something Apple has thought about a lot, and it’s an interesting question whether it’s a good idea or not.

I have no doubt that Apple is working on a small iPad, but that’s a separate question of whether they will actually release it. Let’s think through it.

Why A Small iPad Makes Sense

The iPad is big and a bit heavy, so holding it in one hand for an extended amount of time isn’t comfortable. This makes the iPad rather inflexible for reading or watching video, because it requires holding it with two hands or propping it up on something (like your leg). A smaller iPad would fix that. It’d be great for watching video or reading because there would be many more ways to hold it that are comfortable, which is reason enough for some people to want one. A smaller size and weight would also make it that much better of a travel device.

A smaller iPad would also (presumably) be cheaper—say, $249 or $299, $100 less than the iPad 2 costs today. A sub-$300 price opens the iPad to even more customers. It’d be a web-browsing, video-playing, book-reading, game-playing device for less than $300, which is much easier to justify as a gift or for convenience and entertainment.

The last reason is also a good one for why it makes sense for Apple. Apple’s strategy tends to be to introduce a product that’s really, really good, and then as time goes on, expand the product to fit price-points below and/or above it. With the iPod, Apple introduced it at $399, then a second generation at $299, then an iPod mini at $249, and then the iPod shuffle at $99. Each new model had a slightly different purpose, and they expanded the iPod’s potential audience. Someone who could only afford an iPod shuffle might purchase a regular iPod the next time.

That logic could make sense for the iPad, too. The 10″ iPad is the do-anything iPad, the 8″ is the entertainment iPad. A slightly different intended purpose, and a lower price-point, could expand the iPad’s potential customers to include people who initially were considering Amazon’s Kindle Fire or Barnes and Noble’s Nook—someone who wants to read, watch video and maybe play games, but doesn’t want to spend very much money. And when they realize how much they love their iPad mini (or whatever they call it), they might buy a regular-sized iPad the next time.

That’s also attractive, of course, because it would blunt the Kindle Fire’s demand by eating into its price advantage.

Why the Small iPad Doesn’t Make Sense

That’s why a small iPad could make sense for Apple. Here’s why it wouldn’t make sense: the iPad is not the iPod.

Expanding the iPod line-up was an easy choice, because (1) different iPod models for different purposes didn’t cannibalize the other models, and (2) they were easily replaceable by a different iPod model. A customer who owns an iPod shuffle now can replace it with an iPod classic in minutes, because all they do is play back media.

Let me explain what I mean, starting with two. Apple’s purpose with selling the iPod was simply to sell more iPods.1 All they did was play back the user’s media, so Apple could create as many new iPod variations as they’d like to, since their purpose were all precisely the same. The cheapest model did the same thing the most expensive model did: it played music. Any music you purchased for your iPod shuffle would work just fine for the iPod classic.

This wouldn’t be true for a small and large iPad, however. The iPad’s equivalent to the iPod’s music is applications. That’s what we use them for, that’s what we spend our money on. But here’s the problem: applications designed for the large iPad are not necessarily going to work so well on the small iPad. Let’s say the small iPad’s screen resolution is 1024×768, so it could run current iPad apps at a reduced physical size: many applications are going to be way too small. Applications designed for the large iPad’s 10″ screen can take advantage of that size to include more controls and content on screen at once that, if shrunken down to fit on the small iPad’s 8″ screen, would be too small to use.

In other words, to take full advantage of each device, developers would need to build applications specifically for each screen size, like they do for the iPhone and iPad already.2 As a result, this isn’t so much the introduction of a smaller iPad that users can replace with a large iPad as easy as they do the iPod—it’s actually the introduction of an entirely new device between the iPhone and iPad with its own advantages and disadvantages that must be designed for.

So a small iPad would probably force developers to build applications specifically for each iPad, and thus wouldn’t necessarily lead to the “start on the cheap iPad, then move up to the better, larger iPad” effect people assume. But this also points out something really, really important: a small iPad and the large iPad have very different reasons for existing.

So back to reason number one. With the current iPad, Apple’s intent seems to be to replace the PC as we know it for many purposes. Not for all, and certainly not for all users—but for regular people who use PCs for web browsing, sending email, taking notes and managing their music and photo libraries; and increasingly, for new uses altogether and some creative work, like Square’s point of sale application and painting. What’s more, as the iPad becomes more capable, more involved tasks—like word processing and creating presentations—are also easy to do on the iPad, and that will only be more true as time goes on.

That isn’t true for these small tablet devices, and it wouldn’t be true for a small iPad, either. A relatively large screen is necessary to do these kinds of tasks, and no matter how advanced the software gets, it’s going to be difficult to create a presentation or take notes or make a painting on a 7-8″ screen. These devices are ideal for reading, watching video, playing games and, to a slightly lesser extent, browsing the web. In other words, they’re entertainment devices. And that’s fine—this isn’t a moral judgment—but their size makes their purpose very different from the large iPad’s purpose.

This distinction is important because if Apple is attempting to make tablets the next central computing platform, creating a small iPad could undermine it. Many people do buy the current iPad for the same reasons they might buy these smaller tablets, but once they’re using it, they could begin using it for more uses than they envisioned—like editing video or their photos. But if they buy a small iPad, that isn’t possible. It’s an entertainment device. Someone who purchases a small iPad rather than a large one is someone who may never use an iPad for any more than reading a book, browsing the web and watching a movie. And that’s a lost opportunity for Apple.

Perhaps Apple believes a smaller iPad could be capable enough to achieve their goal. And it’s certainly true that a small iPad could be more useful in certain circumstances than a large one, and thus could expand this new era of computing even farther. But what’s also true is that this nascent tablet space is very much in its infancy and there’s still no telling where it could go. It could end up being that tablets are the new personal computer as we know it, as Apple seems to believe; or it could be that the tablet is more an entertainment device, not a replacement to the PC in any sense of the word. Amazon’s Kindle Fire is unambiguously in the latter camp, and introducing an “iPad” which has a similar purpose to the Fire could swing momentum toward that line of thinking for what the tablet’s purpose is.

While even in that case it wouldn’t be a bad business for Apple—Apple could certainly sell a ton of entertainment-focused tablets—it would also short-change Apple’s capabilities and advantage Amazon. Apple is positioned to deliver this post-PC tablet device in a way that no one else is, but if they’re simply entertainment devices, Amazon can and will challenge them for dominance. Apple’s vertical integration of software and hardware, and their unique position as both a computer and consumer electronics company, is much more of an advantage if tablets are the new PC than if they are just a newer, better iPod.

So What Should Apple Do?

I don’t know what Apple will do. They could introduce a new iPad within a year. I really have no idea.

But I don’t believe they should. In fact, I think at some point, they will introduce a smaller iPad. But I think it needs to be at least several years from now, probably more like five years, because they must establish the iPad—and thus the tablet—as a personal computer, both because I believe it’s what tablets should be and because it’s a better market for Apple to be in.

Price competition from smaller tablets like the Kindle Fire certainly is a concern, but I don’t think Apple should compete with it by introducing a similar device. That only entrenches the market position Amazon carved out. Instead, Apple should compete with it by making the iPad—a much more capable device—increasingly more affordable. Move into lower price-points, which they did by keeping the iPad 2 around at $399. If at all possible, I think they should try to get a model at $349 or even $299, to reduce the Fire’s price advantage even more.

By making the iPad—still just as capable—cheaper, they not only reduce less capable tablets’ price advantage, but they also make the iPad easier to justify for schools. I think targeting education is an especially powerful strategy, because it puts into brilliant relief how different the iPad and smaller tablets are (on the iPad, you can read textbooks, take notes and study in a way that isn’t really possible on a small screen), and it gets them in children’s hands. And when a kid uses an iPad as a computer from the beginning, it’s a lot more likely they’re going to use it as a computer when they grow up, too. For them, the PC will look like an archaic contraption meant to torture users. Sit at a desk and move a little pointer around the screen? Yuck!

So no, I don’t think we’re going to see an iPad mini any time soon.

1. Turning them into Mac users was a nice side effect, but that’s a separate issue entirely. [↩]
2. Of course, relatively simple applications like games could adapt with few changes, but that isn’t the case for all applications. Think about trying to adapt Apple’s iWork suite—it’s not that it can’t be done, but that controls that are large enough on the large iPad’s screen would be much too small if shrunken down to fit on an 8″ screen. [↩]