Apple has a new competitor in the tablet market: the large online retailer Amazon’s Kindle Fire HD. With Amazon’s release of the new device at $199, it seems like Apple’s new Ipad Mini entering at $329 is loosing competitiveness. However, this is decepting.

Apple has a really smart marketing tactic. The new Ipad Mini compared to the old Ipad is a lot cheaper but the function is very much the same. It seems like “cannibalization” of the previous Ipad but with this comaprison, Apple is dragging a lot of customer’s away from Amazon. Analysts say that Amazon might not generate a lot of revenue on hardware, instead they are relying on apps and ebooks. And Apple is quite good with apps, so if they were to start “eating in that”as well, it might force Amazon to lower their prices.

Old Ipad sales are dropping and revenue from the Ipad Mini is relatively lower but it can at least handle competition with Amazon and other tablets that are flooding the shelves for holiday season. “Incremental sales at slightly reduced margins are far preferable to lost revenue.”

Source: http://www.theglobeandmail.com/technology/tech-news/apple-serves-notice-to-amazon-with-ipad-mini/article4632700/

Picture: http://www.ibtimes.co.uk/articles/398749/20121026/apple-ipad-mini-amazon-7in-kindle-fire.htm