iPad mini rumors return

An extremely preliminary rumor suggest Apple may be planning a low-price iPad in response to Amazon getting into the tablet business.

The rumor, reported at Apple Insider, stems from a financial analyst, who in turn says his sources are component suppliers in the Far East. According to Brian White, Apple may be planning a dual release next year: an “iPad mini” in the first few months and then a full-fledged iPad 3 in the spring.

Supposedly the mini would cost somewhere in the $250 to $300 range, and that the name would refer to the price and not necessarily the size.

Frankly the rumor doesn’t seem to make much sense, for several reasons. The main one is the simple issue of how Apple could cut the price down so much. It’s completely unlike the company to switch to bargain-basement components to cut costs, or to skimp on features. It also seems hard to believe Apple would slash its profit margin or even — as appears to be the case with Amazon — sell hardware at a small loss in the hope of increasing software and multimedia content sales.

That only really leaves the possibility of cutting down the screen size to around 7 inches, contrary to White’s explanation of the name. The problem here is that you are throwing away one of the key distinguishing features of the iPad compared with many of its cheaper rivals: that the 10 inch screen is right on the sweet spot of being large enough to comfortably surf the web or watch video, but small enough to be far more convenient than a netbook or laptop.

It’s also very questionable whether Apple really has any interest in getting into price wars: it’s certainly never done so before. If it does, the reported pricing runs the risk of being a horrible compromise: low enough to make a serious dent in Apple’s profit margin, but still so high that anyone motivated mainly by price will probably opt for a rival tablet.

It’s also worth noting this isn’t the first such rumor: similar Asian manufacturer rumblings in 2010 suggested a sub-$400 iPad as small as 5 inches would be on the way by early 2011.