San Jose, Calif. - Apple Inc.'s pencil-thin, smaller iPad will cost much more than its competitors, signaling the company isn't going to get into a mini-tablet price war.
The company debuted the iPad Mini Tuesday, with a screen two-thirds smaller than the full model, and half the weight. Customers can begin ordering the new model on Friday. In a surprise, Apple also revamped its flagship, full-sized iPad just six months after the launch of the latest model.
Apple's late founder Steve Jobs once ridiculed a small tablet from a competitor as a "tweener" that was too big and too small to compete with either smartphones or tablets. Now Apple's own Mini enters a growing small-tablet market dominated by Amazon.com Inc.'s Kindle Fire.
Apple is charging $329 and up for the Mini - a price that fits into the Apple product lineup between the latest iPod Touch ($299) and the iPad 2 ($399). Company watchers had been expecting Apple to price the iPad Mini at $250 to $300 to compete with the Kindle Fire, which starts at $159. Barnes & Noble Inc.'s Nook HD and Google Inc.'s Nexus 7 both start at $199.
"Apple had an opportunity to step on the throat of Amazon and and Google yet decided to rely on its brand and focus on margin," said Bill Kreher, an analyst with brokerage Edward Jones.
Apple has sold more than 100 million iPads since April 2010. Analysts expect Apple to sell 5 million to 10 million iPad minis before the year is out.
Apple shares fell $20.67, or 3.3 percent, to $613.36 when the price was announced.
Shares of Barnes & Noble Inc. jumped 88 cents, or 6.1 percent, to $15.32. Shares of Amazon.com Inc. rose 53 cents, or 0.2 percent, to $234.31.
Apple starts taking orders for the new model on Friday, said marketing chief Phil Schiller in San Jose. Wi-Fi-only models on Nov. 2. Later, the company will add models capable of accessing "LTE" wireless data networks.
When pre-orders start on Oct. 26, the iPad Mini will be competing for the attention of gadget shoppers with the release of Windows 8, Microsoft's new operating system.
The screen of the iPad Mini is 7.9 inches on the diagonal, making it larger than the 7-inch screens of the competitors. It also sports two cameras, on the front and on the back, which the competitors don't.
The iPad mini is as thin as a pencil and weighs 0.68 pounds, half as much as the full-size iPad with its 9.7-inch screen, Schiller said.
The screen resolution is 1024 by 768 pixels, the same as the iPad 2 and a quarter of the resolution of the flagship iPad, which starts at $499.
The new model has better apps and is easier to use than competitors like Google's Nexus, said Avi Greengart, a consumer electronics analyst with Current Analysis.
"This really is not in the same category as some of the other 7-inch tablets," he said. "And that's before you consider that it has a premium design _ it's made of metal that's extremely lightweight."
Jobs attacked the whole idea of smaller tablets in his last appearance on a conference call with analysts in October 2010.
"The reason we wouldn't make a 7-inch tablet isn't because we don't want to hit a price point. It's because we don't think you can make a great tablet with a 7-inch screen," Jobs said. "The 7-inch tablets are tweeners, too big to compete with a smartphone and too small to compete with an iPad."
Job's chief objection was that a smaller screen would make it hard to hit buttons on the screen with the fingers _ never mind that Apple's iPhone, with an even smaller screen, was already a hit at the time.
Apple senior vice president Eddy Cue started working on changing Jobs' mind. In an email sent to other Apple managers in January 2011, Cue said the CEO had started warming to the idea of a smaller tablet. The email surfaced as part of Apple's patent trial against Samsung Electronics Co. this year. Jobs died last October.
Company watchers have been expecting the iPad Mini for a year and most of the details, except the price, had leaked out.
Apple also said it's upgrading its full-size iPad, doubling the speed of the processor. Previously, the company has updated the iPad once a year.
The fourth-generation iPad will have a better camera and work on more "LTE" wireless data networks around the world. Apple is also replacing the 30-pin dock connector with the new, smaller "Lightning" connector introduced with the iPhone 5 a month ago.
The price of the new full-size model stays the same as the previous version, starting at $499 for a Wi-Fi-only version with 16 gigabytes of memory.
Apple also introduced a 13-inch MacBook Pro laptop with a "Retina" display sporting four times the resolution of the older model.
The new model follows a 15-inch MacBook Pro with a Retina display introduced this summer, and goes on sale Tuesday for $1,699.
The old MacBook Pro will still be sold, starting at $1,199.
The new model dispenses with an optical disc drive and a traditional hard drive. Instead, it uses solid-state "flash" memory. This makes it 20 percent thinner and at 3.75 pounds, nearly a pound lighter than the previous model.
Apple also eliminated the optical drive from its new iMac desktop computer, helping slim the edges down to 5 millimeters, one-fifth the thickness of the old model. That makes the edges thinner than most stand-alone computer monitors. It bulges in middle of the back, however.
An iMac model with a 21.5-inch screen will start shipping in November for $1,299 and up, Schiller said. A 27-inch version will start at $1,799.
Svensson contributed from New York.
The event wrapped up.
Apple stock declined $16.03, or 2.5 percent, to $618. Shares of Amazon.com Inc., whose Kindle Fire tablets compete with the iPad, fell 28 cents to $233.50.
Advance orders for the iPad Mini and the new full-sized iPad will begin Friday. They will be available for sale Nov. 2.
The $329 price puts the Mini between the 2011 full-sized iPad model at $399 and the 4-inch iPod Touch at $199. By contrast, Amazon.com Inc.'s Kindle Fire starts at $159, and Google Inc.'s Nexus 7 at $199. Both have 7-inch screens.
There's also a version that will be capable of using cellular networks. That will go on sale two weeks later. That's a feature the cheaper, 7-inch tablets don't have.
The new iPad Mini starts at $329, which makes it more expensive than rival, 7-inch products.
The smaller iPad has a 7.9-inch screen, digitally reversed from the full-sized iPad's 9.7 inches.
Schiller said all of the software designed for the original iPad will work on the smaller one, as the display is 1024 by 768 pixels _ the same as the original iPad.
The latest, full-sized iPad has a sharper screen at 2048 by 1536 pixels.
After much anticipation, Schiller unveils the iPad Mini.
"You can hold it in one hand," he said. It's not just a shrunken down iPad. It's an entirely new design."
Apple unveiled a new iPad, but it's a full-sized version _ an update to the third-generation device that went on sale in March. It promises a faster processing chip and faster wireless Wi-Fi connectivity.
It will also sport the new connector that Apple unveiled with the new iPhone 5 last month. Apple says the new connector helps the company keep up with modern times, but it also requires consumers to buy new accessories or an adapter.
Prices remain the same, starting at $499.
Apple says it sold its 100 millionth iPad two weeks ago. That means it sold about 16 million since the end of the second quarter, the last time it released a figure.
Cook discussed how teachers have been using iPads in their classrooms and said electronic textbooks through iBooks are now available for 80 percent of the high school curriculum. It was a sign Apple was looking to challenge Amazon.com Inc., which has been pushing textbooks on its Kindle devices.
The audience cheered as Schiller unveiled new iMac computers. It looks like a super-thin display screen, but Schiller noted that "there is an entire computer in here."
There will be models with Apple's new fusion drive. That's a combination of the traditional, spinning hard drive and one using "flash" memory. Flash is faster, but capacity is smaller. Schiller says the fusion drive will have the speed of flash and the capacity of regular hard drives.
They will come in two display sizes. The 21.5-inch version starts at $1,299, and the larger one at $1,799. They will be available in December.
As he introduced the new iMacs, he showed on a giant display how the iMac has shrunk over the years.
Schiller teased audience by talking about the Mac Mini, not an iPad Mini.
"You knew there would be something called "mini' in this presentation," he said to laughter.
A new Mac Mini starts at $599 and comes with 4 gigabytes of RAM, or working memory, and a 500 GB hard drive for storage. A $999 version comes with a terabyte hard drive, or double the capacity.
After touting growth in Mac computers at a time when sales of Windows-based machines are slowing, Apple introduced a new MacBook. In June, Apple introduced a MacBook Pro that is about as thin as its already-slim MacBook Air, but with a sharper display. That model had a 15.4-inch screen.
At Tuesday's event, Schiller unveiled a smaller version, with a screen of 13.3 inches. He noted that the 13.3-inch MacBook Pro that Apple already makes has been the company's top-selling laptop. The new version adds the sharper display and is thinner and lighter than the regular MacBook Pro.
"In typical Apple fashion, we are going to take our best product and introduce something better and much cooler," he said.
The starting price is $1,699.
Cook began the presentation with a customary update on past products.
Cook talked about the success of the iPhone 5 and the new iPod Touch, both released last month. He said there have been 3 million iPod Touches sold.
He also talked about an upgrade to Apple's software for mobile devices, iOS 6. He said there were now 200 million devices running iOS 6.
He said the app store had more than 700,000 apps, including 275,000 for the iPad. Customers have downloaded more than 35 billion apps, he said.
He touted an e-book app called iBooks and announced a new version with a new reading option: continuous scrolling. With that, you keep scrolling down the screen rather than flip pages to keep reading. You can also tap on a quote to share instantly on Facebook or Twitter.
The event opens with Cook appearing on stage. "We have some fond memories here, and we're going to create a few more today," he told the audience.