Analyst: Here’s the iPad Mini’s Real Rival

Sterne Agee analyst Shaw Wu has said recent criticism of the iPad mini’s price is unfounded and that the device will do better than predicted. The analyst added that he was not worried about the possibility of cannibalization of sales of the full-size iPad and that the new Apple (NASDAQ:AAPL) tablet posed the biggest threat to personal computers and Microsoft’s (NASDAQ:MSFT) new Surface tablet instead.

Apple announced that its new 7.9-inch tablet would start at $329, $130 higher than the entry point of rival tablets from Google (NASDAQ:GOOG) and Amazon (NASDAQ:AMZN).

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“Like iPhone 5, iPad mini is unsurprisingly catching scrutiny but most so for its price point,” Wu wrote in a research note to clients on Thursday. “This controversy reminds us of what happened with iPod mini and iPod nano. Both predecessors were criticized as being overpriced but went on to do much better than expected. The key reason being high quality at a reasonable price and we see something similar here. While the focus has been on Google and Amazon, we believe PC vendors will ultimately get impacted more. They now have to deal with a $329 iPad.”

Wu added that Apple had actually raised the bar for rivals and was confident that the company’s customers will go on to prove his point. “There is always something to complain about when one is looking for something wrong,” wrote the analyst, who is known to be an Apple bull. “On the other hand, customer response has proven otherwise. We believe what a lot of critics miss is that Apple’s products are still by far the easiest and funnest to use with price points that most find reasonable.”

The analyst added that the biggest rival for the new tablet was not products from Google or Amazon, or even the 9.7-inch iPad, but Windows devices. “We believe iPad mini’s biggest competition is against PCs and Windows, including the arguably overpriced $599 Microsoft Surface tablet with touch keyboard. We continue to believe iPad mini is the competition’s worst nightmare and will likely slow down adoption of competitor tablets. In particular, we believe this could end up being a very tough holiday season for Windows 8.”

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