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Apple Inc. (AAPL): Was This Steve Jobs’ Biggest Mistake?

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Let’s face it: Steve Jobs was wrong. The Apple Inc. (NASDAQ:AAPL) co-founder famously bashed smaller tablet form factors in 2010, saying that a 10-inch device was the perfect size. Then Apple Inc. (NASDAQ:AAPL) launched the iPad Mini two and a half years later, and now the product family will never be the same.

Consumer demand has been quickly shifting toward smaller form factors, starting most notably with, Inc. (NASDAQ:AMZN)‘s Kindle Fire lineup. The e-tail giant was able to rank No. 3 in the tablet market in the fourth quarter with an estimated 6 million units shipped, and the company’s larger model doesn’t seem to have been selling particularly well.

Apple Inc. (NASDAQ:AAPL)Thanks to that transition, larger display panel shipments throughout the industry are getting eaten alive.

Paint me a picture
NPD DisplaySearch recently released some estimates on tablet panel shipments in January, and the data shows a precipitous drop in larger sizes (9 inches and above) accompanied by an increase in smaller sizes (7 to 8.9 inches). The total market decreased sequentially from December, which is expected because of seasonal patterns.

Tablet PC Panel Shipment in Dec.’12 and Jan’13 (Million units). Source: NPD DisplaySearch.

Shipments of 9.7-inch panels fell dramatically from 7.4 million in December to 1.3 million January — an 82% drop off. Of course, that size panel is primarily the full-sized iPad. Within the larger segment, the 10.6-inch display is predominantly Microsoft Corporation (NASDAQ:MSFT) Surface (both RT and Pro models). Those shipments went up slightly, which is expected since the software giant just recently launched the Pro model while yesterday announced it was expanding international availability of the RT model.

Paint me some bigger pictures
It would seem that all the reports that Apple is cutting panel orders have some legs after all. The iPad maker reportedly reduced 9.7-inch panel orders from LG Display Co Ltd. (ADR) (NYSE:LPL) by 90% in January to just 600,000, while Sharp has nearly halted production of that size also.

Both Tim Cook and I have warned investors about reading too deeply into individual data points related to Then Apple’s Inc. (NASDAQ:AAPL) supply chain, since they can’t accurately paint a bigger picture. That being said, DisplaySearch does detail its estimates on Apple’s production plans for the year, and the researcher believes that Apple has reduced its overall iPad build plans amid a shift toward the iPad Mini.

Source: NPD DisplaySearch.

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