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Is Apple Cannibalizing Itself With The Mini?

|Includes: Apple Inc. (AAPL)

I have to say that if Jaded is right and Apple is building mini iPads that "target aggressive price points difficult for competitors to profitably match", than Apple's making the most unimaginably bad move possible and at the worst possible time.

Let me explain. Jaded's "aggressive price points" I believe can be fairly interpreted as low margin devices. This a critical point.

It is likely assumed that iPad mini sales will be in addition to existing iPad sales therefore adding to sales numbers and consequently growing margin.

Wrong - it must be assumed that some percentage of low margin iPad minis will cannibalize the high margin iPad sales -- an Apple disaster.

This is easy to imagine. Many people purchase Apple products for the name "Apple". What if I could get an "Apple iPad" for 1/2 the price? 1/3 the price? Would people still be lining up pay the premium high margin units? I think no, not all of the them anyway. If Jaded is right here I could see Apple cannibalizing anywhere from 15%-40% of iPad sales

I walk into a store and see an New iPad for $459 and a mini for $199, then guess what. If it reads my books (it will), plays my music and movies (it will) lets me read my email and surf the web (it will,) then I'm buying the mini and Apple just lost a big margin sale.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: But if Apple does start cannibalizing iPad sales with a low margin iPad mini, I'm going short AAPL.