Apple Inc. Chief Executive Officer Tim Cook unveiled a smaller, thinner iPad that carries a price high enough to shore up profit while leaving room for competitors to sell their tablets more cheaply.

Apple said yesterday that the 7.9-inch iPad mini will cost $329 to $659, depending on memory and wireless features. With that starting price, the company is sticking to its strategy of charging a premium for its products to preserve industry-leading margins as it competes in a market that NPD DisplaySearch predicts will more than double to $162 billion in five years.

Cook is betting that a set of features that includes dual cameras, long battery life and access to iTunes and the company’s App Store with more than 275,000 iPad software applications will induce consumers to shun cheaper alternatives. Amazon.com Inc.’s Kindle Fire HD, Google Inc.’s Nexus 7 and tablets from Samsung Electronics Co. all start at around $200.

“Competitors are probably breathing a sigh of relief,” said Chris Jones, an analyst at Canalys. Even so, he said the device will be a popular holiday gift and predicted that Apple will sell more than 10 million iPad minis by the end of the year, even after going on sale in November.

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 Google, yet decided to rely on its brand and focus on (profit) margin,” said Bill Kreher, an analyst with brokerage Edward Jones.

Apple shares fell $20.67, or 3.3 percent, to close at $613.36 after the price was announced. Shares of Barnes & Noble jumped 88 cents, or 6.1 percent, to $15.32. Shares of Amazon rose 53 cents, or 0.2 percent, to $234.31.

After much anticipation, Apple executive Philip Schiller unveiled the iPad Mini at an event in San Jose, Calif.

“You can hold it in one hand,” he said. It’s not just a shrunken down iPad. It’s an entirely new design.”

There are six different configurations of the iPad Mini with different access capabilities and storage amounts. Each device comes with a 7.9-inch screen measured diagonally and has the same 1024-by-768 pixel resolution as the iPad 2.

Models, Prices

The Mini has the same dual-core A5 chip as the iPad 2, front and back cameras and 10 hours of battery life. It is 7.2 millimeters (0.28 inch) thick and weighs 0.68 pounds, just over half the 1.33 pounds of the iPad 2. It comes with the new Lightning connector, which was introduced with the new iPhone last month.

The models:

  • iPad Mini, Wi-Fi only, 16 gigabytes of storage, $329
  • iPad Mini, Wi-Fi only, 32 GB, $429
  • iPad Mini, Wi-Fi only, 64 GB, $529
  • iPad Mini, Wi-Fi + Cellular, 16 GB, $459
  • iPad Mini, Wi-Fi + Cellular, 32 GB, $559
  • iPad Mini, Wi-Fi + Cellular, 64 GB, $659

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.

Apple also unveiled new Mac computers, including a 13-inch version of a MacBook Pro with sharper, “Retina” display.

Apple has sold more than 100 million iPads since their debut in April 2010. Although Apple dominates the worldwide tablet market with 70 percent of shipments in the second quarter, according to IHS iSuppli, Amazon and Google have been able to make in-roads with the smaller alternatives. A smaller iPad from Apple Inc. could help the company cement its dominance.

The event at the California Theatre comes a few days before Microsoft Corp. starts selling a new version of its Windows operating system, one designed to work well on both traditional computers and tablets. Microsoft is also releasing its own tablet, the Surface, on Friday. It will be slightly larger than the full-sized iPad.

Advance orders for the iPad Mini and the new full-sized iPad will begin Friday. They will be available for sale Nov. 2.

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.

Cook also 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.

Although Apple dominates the worldwide tablet market with 70 percent of shipments in the second quarter, according to IHS iSuppli, Amazon and Google have been able to make in-roads with the smaller alternatives. A smaller iPad from Apple Inc. could help the company cement its dominance.

Cook and Schiller, the senior vice president for worldwide marketing, made presentations of new products other than a new iPad to open the event.

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.

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 AP and Bloomberg contributed to this report.)