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Where Does the iPad Mini Fit?

Last month, when Apple announced the iPhone 5 and the new iPod Touch, their pricing seemed to preclude the long-rumored 7.85" iPad "Mini" or "Air" or whatever they end up calling it. I even went so far as to ask if Tim Cook had killed the iPad Mini in the crib. And yet the rumors persist, some incredibly detailed.

But let's take a look at the iOS universe and see if there's really a place for a smaller tablet. I've prepared a chart to show all the devices, excluding the iPad's optional 3G or LTE feature, because that doesn't really matter here.

Apple hits every price from $0 to $699 in hundred-dollar increments, with one $50 increment at the 32GB 4th generation iPod Touch. The overlapping prices are what interest us here. A company can offer similar products at the same price, but only if there is enough differentiation between them to make sense to the consumer. Otherwise, the product line is just a huge, jumbled mess -- and that isn't how Apple operates.

The iOS line doesn't have many price overlaps, but they are instructive. For $199, you can get either a 16GB iPhone 5, or an iPod Touch with the same memory. What's the difference? The phone gives you, duh, a phone -- but it also locks you into an expensive contract. Also, the iPod uses a cheaper (but still "Retina" density) screen, and an older, slower processor. So we have three points of differentiation.

$299 gets you an iPhone 5 with 32GB, or the new 5th generation iPod Touch. Again, same memory on both devices. Same screen on both devices, too. And the same A6 processor. The only differentiation is that one is a phone that comes with an expensive contract.

At $399 is where things get interesting. You can have the 64GB phone, the 64GB iPod, or the 16GB iPad tablet. We have two tiny devices with tons of storage versus a bigger device with comparatively little storage. You get the bigger screen, but you lose memory, the Retina Display, and the new A6 processor.

Where do you squeeze in a smaller iPad?

First off, two assumptions. The iPad Mini/Air/Nano/Whatevs will have the same 1024x768 resolution as the iPad 2. Those pixels would be packed into a smaller space, so the screen would be damn sharp -- but not Retina Display sharp. We also have to assume that it would use the same A5 processor and the same 16GB of storage space, so as not to destroy the buying case for the iPad 2. Apple might be tempted to cheap-out and limit the Mini to 8GB, but that's just not enough memory for a tablet.

At $249, Apple will already sell you the iPad Touch with the old processor. What is there to differentiate between the two devices? Buy the Mini you'd lose half the memory, but you'd gain the bigger-but-not-Retina screen and a faster A5 CPU -- is that a good model? It just might be.

Price the iPad Mini at $299, and it goes up against the new iPod touch and the mid-level iPhone 5. What's the differentiation? Both have the A6, both have 32GB. (I keep mentioning the CPU, because that's what will determine how long you'll be able to continue upgrading your iDevice with the newer versions of iOS. You can save money, but you'll lose probably one year of future iOS updates.) At this higher price, you'd still only get half the storage as the competing iDevices. You lose Retina. And you lose CPU speed in comparison. This does not seem like an as-good purchasing decision.

We can't bump the Mini's price to $399, because pricing it exactly the same as the iPad 2 just makes no sense. The only differentiation would be the size of the screen, and nobody is going to pay the same for less. At least I don't think they would.

Let's try $349. Would you take a $50 off (about a 15% discount) from the iPad 2, for the same specs and a screen one-third smaller? To me, that just isn't a compelling decision. At $399 iPad 2 puts a pretty low upper limit on a sensible price for the iPad Mini. And then there's the competition, which sells plenty of 7" tablets for $199, or even less.

So let's revise that table.

Things are starting to get crowded in that $199-$299 zone, but I think that's OK, because $300 is usually considered the upper limit of an impulse purchase. And Apple can make the sales pitch that, yes, you can buy some cheesy 7-inch Android tablet with far fewer apps and a so-so screen for $199, or you can run all your iOS apps on this beautiful new Apple-engineered almost 8-inch tablet.

That, I think, would be a pretty compelling case for a lot of consumers.

So I take it back. There is room in Apple's price structure for an iPad Mini. And the sooner, the better.