How can Apple sell iPad mini for less than an iPod touch?

The big unanswered question about the new iPad is where it fits in Apple's price portfolio

FORTUNE -- There were a lot of eyebrows raised by a German blog's leak last week of what purported to be price points -- in euros -- of 16 iPad mini configurations, from 8GB Wi-Fi only to 64GB Wi-Fi and cellular. Converting the currency, subtracting Germany's 19% value added tax and doing some rounding, the price grid in dollars looks something like this:

8GB WiFi Black/White, $250
8GB Cellular Black/White $350
16GB WiFi Black/White $350
16GB Cellular WiFi Black/White $450
32GB WiFi Black/White $450
32GB Cellular Black/White$550
64GB WiFi Black/White $550
64GB Cellular Black/White $650

Some commentators, confronted with this grid, saw the entry price of $250 (or $249) as too high, considering that Google's (GOOG) Nexus 7 sells for $199 and Amazon's (AMZN) Kindle Fires start at $159.

Others saw $249 as too low. After all, the new iPod touch starts at $299. How in the world can Apple (AAPL) sell a 7.85-inch iPad for $50 less than a 4-inch iPod?

Two expert Apple watchers -- Daring Fireball's John Gruber and Asymco's Horace Dediu -- addressed that question this week.

Gruber's answer comes in two parts. First he argues that although bigger often costs more than smaller, miniature carries a premium. "Gadget prices tend to follow a U-shaped curve," he writes. "Big is expensive, small is cheap, miniature is expensive. The iPad (3) is near the beginning of the curve. The iPhone and iPod Touch are at the end. This new smaller iPad will be in the middle."

"Second is that Apple has no problem if iPod sales, including the Touch, continue to be cannibalized by other iOS devices. If a customer walks into the store and sees a (say) $249 smaller iPad and decides to buy that instead of a $299 iPod Touch simply because it's cheaper and bigger at the same time, that's still a win for Apple. The customer just bought an iPad."

Dediu begins by reminding us that Apple still sells a 16GB fourth-generation iPod touch for $199. When that device is added to the mix, the price chart he draws -- and which I've copied below -- makes a lot more sense. 

w = Wi-Fi only; c = Wi-Fi plus cellular. Source: Asymco

Dediu has created an interactive Pixxa "padcast" that shows how much iOS you can buy depending on how much you are willing to spend. If you have access to an iPad, you can get the padcast here.

iPad Mini to be WiFi-only, Launch Alongside Updated iPad 3?

                

As anticipation builds for Apple’s long-awaited iPad Mini, The Guardian claims to provide new details about the device. According to their sources, the iPad Mini will be WiFi only at launch, with no cellular data option, in order for Apple to keep pricing for the device as low as possible. It will also launch alongside an updated version of the 3rd-gen iPad.

The Guardian:

Apple‘s expected “iPad mini” will only come in a Wi-Fi version – but there will also be a revised version of the iPad with 4G connectivity compatible with the UK’s Everything Everywhere network, and sporting the new “Lightning” connector, industry sources have told the Guardian.

According to the report, the revised 3rd-gen iPad will include Apple’s new Lightning connector, as well as improved 4G LTE support that will work with the Everything Everywhere network in the U.K. It’s not surprising that the iPad Mini won’t include cellular data (it’s a budget entry-level device, after all),  although it does contradict some fairly convincing part leaks showing a 3G iPad Mini. It’s also possible that a 3G version will be released at a later time.

The idea of an updated iPad 3 being released ahead of a presumably much more significantly 4th-gen iPad is a bit bizarre, despite the fact that it has been reported frequently by a number of relatively credible sources. It does make some degree of sense, however – especially if Apple rolls out the update silently, replacing the current 3rd-gen iPad on shelves with minimal fanfare. Apple’s likely anxious to eliminate the now obsolete 30-pin dock connector from all of their current products.

The iPad mini is expected to be as thin as an iPod touch, and feature a narrow bezel, and is expected to be launched in October, with media invites rumored to be sent out any time now (maybe even today!) for the launch event. Apple has reportedly already ordered 10 million iPad Minis tor the first few months of sales.

The device is expected to sell for between $200 and $300 (1, 2), and will likely resemble a smaller version of the iPad 2. Check out our iPad Mini tag for all the latest news and rumors!

Chinese Company Successfully Cracks Apple’s Lightning Cable::

Apple’s new Lightning connector, used in the iPhone 5, and the new iPod touch and iPod nano, may be cool, tiny, and reversible, but as we reported shortly after the iPhone 5 was released, it also includes an authentication chip from Apple. This made it impossible for third-party manufacturers to make working cables and accessories – until now, that is!

MacRumors reports (via MIC Gadget) that Chinese accessory maker iPhone5Modhas successfully cracked Apple’s authentication chip, and has released a new iPhone 5 dock, as well as a custom glowing Lightning cable, which are both currently for sale on the website as a $40 package (or $20 each).

It’s rather unfortunate that the company wasn’t able to reduce the price of a lightning cable – at $20, you can purchase an official cable directly from Apple (often available at carriers for as low as $16), although it won’t glow and pulse like the iPhone5Mod cable.

Most important is the fact that they have cracked Apple’s authentication, which could pave the way for other third-party manufacturers to produce Lightning cables and accessories, and drive the price down to something more reasonable – as with many third-party 30-pin dock connector cables.

Apple Releases iOS 6 – Here’s Everything You Need to Know!

Today’s the big day! Apple has just officially released iOS 6 to the public. The update is available now for immediate download through iTunes for the iPhone, iPad, and iPod touch. The update is also available over the air.

Keep an eye on this post for everything you need to know about the update!

iOS 6 is available for the following devices:

• iPhone 3GS
• iPhone 4
• iPhone 4S
• iPad 2
• The new iPad
• Fourth-generation iPod touch

Direct links to the iOS 6 update can be found below:

• iPhone 3GS
• iPhone 4 (AT&T, 3,1)
• iPhone 4 (AT&T, 3,2) (8GB iPhone 4 released with the iPhone 4S)
• iPhone 4 (Verizon)
• iPhone 4S
• iPad 2 (Wi-Fi)
• iPad 2 (Verizon)
• iPad 2 (AT&T)
• iPad 2 (2012 Model)
• iPad 3 (Wi-Fi)
• iPad 3 (AT&T)
• iPad 3 (Verizon)
• iPod touch 4G
• iPod touch 5G

Make sure to keep an eye on this page for the latest updates, including links to all of our coverage of today’s iOS 6 launch!

iOS 6 Details, Tutorials, and Editorials

• What You Need to Know About iOS 6
• iOS 6: The Complete Upgrade Guide – When, Why, and How to Upgrade
• How to Update to iOS 6 Over-The-Air
• How to Update to iOS 6 Using iTunes
• How to Prepare Your Device for iOS 6
• Which New iOS 6 Features Will Be Available On Your Device?
• iOS 6 Panorama Mode Hands-On With an iPhone 4S
• iOS 6 App Store Now Promotes Apple’s Free Apps With One Tap Installation
• iOS 6 App Store Revamped With New Interface, Chomp-Style Search Results
• iOS Through The Ages: How Apple’s Mobile Platform has Evolved from the Original iPhone to iPhone 5
• First Passbook-Enabled Apps Appear on the App Store

Feature Rundowns: What’s new, improved, and exciting about iOS 6!

• What’s New With Mail?
• All About Apple’s New Maps App in iOS 6
• Meet iOS 6′s new Do Not Disturb mode! At last!
• iOS 6: What’s New With Siri?
• All about Passbook – A better way to manage tickets, gift cards, and passes!
• Apple Brings Facebook Integration to iOS 6 and OS X Mountain Lion

Other Coverage

• Apple Releases OS X 10.8.2 With Full Compatibility for New iOS 6 Features
• Apple Updates Nearly Every Single iOS App for iOS 6 and iPhone 5
• Apple Updates “Find my Friends” for iOS 6, Adds Push Notifications for Locations
• Apple Updates Cards for iOS 6, and Finally Adds Native iPad Support!
• Aperture and iPhoto updated with Shared Photo Streams and full iOS 6 support
• iPhone 5 Ship Times Slip to 3-4 Weeks On Continued High Demand
• Apple Brings Gatekeeper to Lion with OS X 10.7.5

iPhone 5 will drive GDP, chip growth, analysts predict

Just how big is the expected release this Wednesday of theiPhone 5? How about big enough to show up in U.S. GDP growth and account for a sizable chunk of global chip revenues.

Adds to U.S GDP: Let's start with the U.S. economy. "We believe the release of iPhone 5 could potentially add between 1/4 to 1/2 percent-point to fourth quarter annualized [gross domestic product] growth," said JP Morgan in a research note today.

The note continued. "Our equity analysts believe around 8 million iPhone 5's will be sold in the U.S. in Q4, even while sales of previous generation iPhones are maintained at a solid pace."

More specifically, sales of the iPhone 5 could boost fourth-quarter GDP by $3.2 billion, or $12.8 billion at an annual rate, JP Morgan said. That would result in an annualized GDP growth in Q4 by 0.33 percent, according to the Wall Street banking firm.

Contributes noticeably to worldwide chip revenue: Next, chip revenue. Smartphones are basically glass and a protective shell wrapped around a bunch of chips. And Apple is a voracious consumer of NAND flash memory, 3G/4G silicon, and processors, among other silicon.

"We estimate that Apple's iPhone5 could account for 4.4 percent of total semiconductor revenues in 2013," RBC Capital Markets, said in a research note today.

"This equates to $13.9bil in annual semiconductor sales into the iPhone5. Once we ascertain components upon a comprehensive tear-down, usually available two weeks after launch, we can more accurately assess total contents," the note added.

The most significant iPhone to date: Deutsche Bank also chimed in today. "We expect the iPhone 5 to be the most significant iPhone upgrade to date as both the radio (LTE) and form factor are being upgraded simultaneously," the firm said.

The note continued. "We expect this feature set to drive a massive refresh cycle which should be reflected in Apple's valuation over time."

A Bunch Of Models Rocked Google Glasses At New York Fashion Week

Google took its presence at New York Fashion Week to a new level yesterday when it invaded the Diane von Furstenberg runway.

The company, which has live streamed shows from The Tents at Lincoln Center on YouTube for a few seasons now, gave the Furstenberg team glasses in carrot orange, white, and turquoise to use for the show.

Sergey Brin, co-founder of Google, walked with von Furstenberg during her finale — showing off the glasses.

"Beauty, style and comfort are as important to Glass as the latest technology," Brin said in a statement. "We are delighted to bring Glass to the runway together with DVF.”

New iPhone 5 'won't include' Samsung chips or screen::

Samsung is most definitely not in Apple’s good books following their defeat in a California court last month, and now the two appear to have fallen out over pricing for the Samsung memory chips Apple uses in its iPhone, with Apple replacing the memory chips and screens with non-Samsung products in its first batch of iPhone 5 smartphones.

The first batch of new iPhones, expected to launch this month, will not include memory chips or displays supplied by Samsung, according to reports.

Bloomberg writes that its unnamed source revealed that the switch is due to a because of a disagreement about pricing.

However, Apple will still be using the A-series of processors from Samsung to power the device expected to launch on 12 September, and according to Reuters sources, Samsung still remains on the list of suppliers for the new iPhone.

Reuters sources claim that the reasoning behind the move has nothing to do with the Apple verses Samsung patent dispute. Instead, it is in line with Apple's plan to diversify its supply chain.

Seoul-based NH Investment & Securities Co analyst Lee Sun Tae told Bloomberg: “Apple doesn’t like to be dependent on Samsung - there’s no question about it.” However, they added: “There’s only so much volume Apple can get from other vendors. They will probably have to come back to Samsung later on.”

However, The Wall Street Journal suggests that the reason behind the switch is the escalating disputes between the two technology giants. Daishin Securities analyst John Park told them: “Apple started to lessen its dependence on Samsung for components since the latter half of last year when the two were fighting to win the spot for the world's largest provider of smartphones. But Apple's move to diversify its component vendors likely accelerated since early this year when the Apple-Samsung patent litigation escalated."

According to research by Sanford C. Bernstein, the new screen technology in the new iPhone will be provided by LG, Sharp and Japan Display KK, reports Bloomberg. The smaller screens that will appear in the iPad mini when it launches in October will come from AU Optronics and LG, according to that report.  

According to a Korean Economic Daily report (via Apple Insider), Toshiba, Elpida Memory and SK Hynix will provide the memory chips.

Earlier this year when Apple was reported to have secured chips from Elpida, the news wiped $10 billion of Samsung’s market cap.

According to Bloomberg data, Apple is Samsung’s largest customer, accounting for 9% of its revenue.

Samsung is the manufacturer of the A-series of processors – the A4 and A5 chips that Apple designs in-house and uses as the heart of the iPad and iPhone.

Gartner estimates that Apple will spend around $2.1 billion on these A-series chips this year.

DigiTimes has previously reported that Apple is tied into a contract with Samsung regarding the A6 processor, and won’t be able to drop its chip orders until 2014.

The Apple versus Samsung trial could cost Samsung far more than the $1bn the company is supposed to pay Apple for infringing its patents.