Ok, so I really didn’t have that conversation with my iPad 3. At least not out loud! But it is true: The new iPad mini is replacing my iPad 3; lack of Retina display, be damned! Before I share more thoughts on the two tablets and what led me to the decision, let me bring back some salient points I made nearly two years ago on Apple missing out on the small tablet market. That post, along with the great reader commentary, was read by Apple executives who then decided to enter the small tablet market.

What’s the big deal about small tablets?

Here’s my summary from back then when describing the experience with my 7-inch Galaxy Tab:

“I’m not suggesting everyone dump their iPads; I’m simply explaining my own decision making process to help you make your own. And aside from our own Darrell Etherington at the GigaOM Apple channel who tried, and then returned a Tab, I’ve heard from at least a dozen Tab owners who are also finding less use for the iPad (and other devices) based on the 7-inch form factor. Darrell’s experience with the Tab ironically made him realize that he wants a 7-inch iPad. I’m inclined to agree and would consider dumping my Tab if Apple were to sell such a device. It would be the best of both worlds, regardless of Steve Jobs’s insinuation that it will never happen.

Darrell’s sentiment highlights a key point I’m trying to make here: We often look at the features of a device, but I contend that form is just as much a feature as the CPU clock cycle or the amount of memory in a mobile device. Of course, you never know that until you try a new form factor to see how it fits in your lifestyle. I’m glad I did that with the Tab.”

Perhaps the most important point here is that without the experience of using a small slate, it’s easy to miss its biggest benefit: portability.

But it doesn’t have a Retina Display!

Dooming the device without experience is of using it has already been seen: iPad mini naysayers were decrying the device for its 1024 x 768 display before the device even shipped. I can’t argue with them that the Retina display on the recent iPads are outstanding. But the screen on the iPad mini isn’t as bad as the ones found on the first two iPads.

“Wait, aren’t those all 1024 x 768 resolution? How can the iPad mini screen be better than the first two iPads?” I’m glad you asked, and it’s a pretty simple answer really. Because the same 786,432 pixels of a display with this resolution are crammed into a smaller screen, the pixel density is greater. That means, all things being equal, things on the screen will look clearer. Not by much, but enough to see a difference. So no, the iPad mini display can’t compete with the screen on the newest iPads, but it’s better than the iPads from two or three years ago.

Just as I said when I dumped the first iPad in favor of a 7-inch tablet, I don’t expect everyone to follow suit. After all, thanks to a myriad of applications, the iPad is used differently by everyone. For example, I actually don’t create much content on an iPad, outside of emails and social network updates, that is. If I actually used my iPad to write my daily blog posts, I might feel differently as I find that activity better on a screen larger than 7 or 7.9 inches.

Instead, I do far more content consumption: ebook reading; web browsing; watching TED videos, television episodes and movies; using various apps and games. All of these activities fit nicely on the iPad mini and I’m already doing them in more places: my “large” iPads always tended to stay at home, but the iPad mini can easily go anywhere. And as I noted in early 2011, the best tablet is the one you have with you.

A full iPad experience in a smaller package is a huge selling point

As far as the iPad mini’s usage, performance and feature set, I feel like I’m getting the full iPad experience in a package more suited to my particular needs. Based on a visit to the local Apple Store in King of Prussia, Penn. over the weekend, I suspect many others are starting to see the light. I watched person after person enter the store and walk up to the iPad mini display units with a quizzical look on their face, as if to say, “What’s the point of this smaller iPad?”

More often than not, those looks melted away after a few minutes and it was as if I could actually see the light bulbs going off over people’s heads. Between the portability, the lower price and the full iPad experience, I suspect Apple will sell more iPad mini tablets this holiday season than any other iPad model.

So, goodbye, iPad 3. You were great; whenever I had you around, that is. The problem is a slimmer, lighter model provides the same utility in more places for me; even with that lowly 1024 x 768 display.

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The New York Times‘ David Pogue

iPad Mini is a far classier, more attractive, thinner machine. It has two cameras instead of one. Its fit and finish are far more refined. And above all, it offers that colossal app catalog, which Android tablet owners can only dream about.

Daring Fireball’s John Gruber

It’s really light and easy to hold one-handed. But it’s disappointing to go non-retina after using the retina iPad for the last seven months….My ideal iPad would be a Mini with a retina display.

USA Today‘s Ed Baig

Sitting in a cramped airline seat, or lying in bed, I found reading on the Mini to be a generally a more pleasurable experience than reading on the full-size iPad. But though you can now more easily hold a Mini with one hand, I still tended to use two.

Jim Dalrymple

In addition to using the iPad mini in my normal daily tasks, I also found that I would pick up the mini and use it where I normally wouldn’t use the iPad. For instance, if I’m on a phone call, I would typically use my iPhone to look things up while I walk around or type notes, look at Web sites and things like that. Now, I’m using the iPad mini because it’s compact enough to carry around, but not so large that it’s cumbersome.

CNET’s Scott Stein 

If you want the full, polished Apple tablet experience in a smaller package, the iPad Mini is worth the premium price. Otherwise, good alternatives are available for less money.

For whatever it’s worth, I played with one at the launch event last week and wasn’t entirely convinced that I needed to take a step back from the iPad 3 with Retina display — which goes wherever I go.

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Are the days numbered for the $399 iPad 2?

When Apple announced the new iPads in March, it dropped the cost of the lowest-priced iPad 2 (the 16GB Wifi only version) by $100 and continued to sell it side by side with the third-generation iPad. This is not in the usual mold of clearing out previous generation products at a reduced price.

Analysts speculated that Apple kept the iPad 2 around to counter the threat from cheaper tablets, specifically Kindle Fire. Despite being a year old, the iPad 2 is packed with power and features that other tablets do not come close to matching. Offering it at $399 helped bring in new customers who didn’t consider buying it at $499 and snag some who would have bought a Kindle Fire.

It is a win-win for Apple — almost. The $399 price point is also attractive to those who otherwise would have bought the new iPad at higher price points. This is what economists call second degree price discrimination. When offered multiple options at different prices, customers pick the one that gives them the most value (consumer surplus). In the absence of the $399 iPad 2, customers would have picked the pricier new iPad. But when offered side by side, some see higher consumer surplus from the iPad 2 than the new iPad. That is exactly why Apple kept just the 16GB Wifi model of the iPad 2 and not the entire product line.

For every customer who chooses to buy the iPad 2 instead of the new iPad, Apple loses $100-plus in pure profit (the cost difference between the models are marginal). If that total loss turns out to be more than the profit from selling the iPad 2 to new customers, Apple will quickly pull the plug on the iPad 2.

We will not get a breakdown from Apple on the number of iPad 2s and new iPads sold. But we can figure out these numbers by doing simple math on Apple’s earnings statement.  Last quarter, when it had the $399 iPad 2 for only a month, Apple sold about 2.1 million $399 iPad 2 units. That was 18 percent of the total number of iPads sold, which did not increase much from the previous quarter. This translates to just 10 percent of total iPad revenue. The higher the number of iPad 2 units sold, the lower its contribution to revenue.

This is the first full quarter when iPad 2 and the new iPad are sold side by side. Apple would prefer to keep the iPad 2 proportion at 18 percent or lower. If that number goes up, it signals significant erosion of Apple’s iPad profits by its own product.  The worst case scenario is that Apple sells three times as many iPad 2s as the previous quarter without a net increase in total number of iPads sold.

When the earnings report comes in next month, pay close attention to the iPad numbers. If you have been waiting to buy one, you might want to grab one now before they’re gone.

Rags Srinivasan is a management professional who specializes in product strategy and strategic marketing. He is currently working on big data products. He blogs at Iterative Path and tweets at @rags.

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Similar to last month, Hawaii and California lead in new iPad activations, accounting for nearly 18 and 16 percent, respectively. But Nebraska is a surprise No. 3. A big part of that isn’t due to your regular gadget consumers, but one of the state’s public education initiatives, which includes a 1-to-1 iPad program for students, according to the report.

You can see the other top seven states (and a district) for new iPad activations in May in the chart below:

Credit: Chitika Insights

But it’s not just Nebraska. There are other mainly rural — and less populated — states whose citizens are also scooping up the latest iPad. According to Chitika:

Nebraska’s adoption numbers in this second month, in addition to high adoption rates in states like Virginia, West Virginia and Alabama, indicate that rural states cannot be broadly labeled as technology laggards. Those residents are now pushing technology trends, often in greater numbers than their East and West-coast counterparts, rather than following them.

This kind of trend is exactly what needs to happen for Apple to continue to grow its customer base. The company can’t just sell new iPhones and iPads every year or every other year to the same early adopter types. By expanding through new industries — education, healthcare, transportation, etc. — the iPad is bringing Apple as a company into new territories that the Mac, at least at this stage in its life, never could.

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However, after two weeks with my new iPad, I’m suddenly taking advantage of these gesture functions like never before. In fact, I can think of only three instances that I even need to hit the home button anymore: Waking the device, grabbing a screen shot and getting out of the mode that lets you delete or move apps around.

Gone is the hardware button double-tap to switch back and forth between apps. No more pressing the button to return to the home screen either. After rediscovering these gestures and then making them part of my navigation workflow, I’m getting around the iOS environment far faster on my iPad. Here’s a summary of the multi-finger gestures currently available for iPad navigation; aside from the standard two-finger pinching and double-tap to zoom functions.

Five-finger pinch: Here you just “grab” the screen at any point to get back to the Home screen. It’s quick, fast and simple.

Four-finger swipe up: Want to see the multitasking bar, showing you the most recently used apps? This gesture replaces the double-tap of the Home button. You can pick a different app here or simply swipe four fingers back down to hide the multitasking bar.

Four-finger swipe left / right: Thanks to this gesture, I actually don’t use the multitasking bar much, if at all, anymore. By swiping four fingers left or right, the iPad quickly moves you through your running and most recently used apps. I strategically open my most used apps one after another, so I can quickly swipe between Mail, Safari, and the Kindle app for example.

A few extra hints and helpers

First, you have to make sure that gestures are turned on for your iPad. Look in Settings, General, Multitasking Gestures to set the slider to On if needed.

Second, you can actually remove an app from your multitasking bar with gestures, although you can’t remove an app from the Home screens without the Home button. To do this, use the four-finger swipe up to show the currently running and recently used apps.

Then tap and hold on any of these apps to get into editing mode. Tap the upper left badge — the red minus sign — on any app or apps you want to remove. When done, simply do a four-finger swipe down to hide the multitasking bar and the selected apps are gone!

Again, these gestures first appeared over a year ago and you could have enabled them by a little bit of tweaking effort and a $5 download. But they’re the real deal now and after embracing them these past two weeks, I find the iPad much simpler, intuitive and quicker to use all around.

Maybe I’m just slow to the multi-finger gesture game though. Let me know if you’re using them in this simple little poll as I’m wondering if these gestures are a type of hidden function that some iPad owners don’t know about.

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Before sharing my impressions, let me emphasize that they are just that: my impressions. We all work differently, have varying expectations from our very personal mobile devices, and have unique needs. So although I am mentioning Android tablets, my intent isn’t to start another futile “iPad vs. the others” war. I’m lucky in that I can offer perspective by using an iPad and the others, so take from this what you will and buy what works best for you.

It’s like the old iPad, only better

There is little external difference between the new iPad and prior models; most people would be hard pressed to pick them apart in a lineup. Sure, the most recent iPad is slightly thicker and heavier, but neither is a detriment to the overall experience. You can still tote the iPad and carry much less weight around when compared to a laptop, for example. I still believe that for me, a larger tablet is less portable than a 7-inch slate. I generally take my Galaxy Tab 7.7 tablet everywhere, while the iPad is mainly used at home.

As an HDTV owner since 2001, I am all about high-resolution displays, and the new 2048 x 1536 screen on the new iPad doesn’t disappoint. If I had to pick, I would say it’s the device’s best hardware feature by far. I may place a higher emphasis on displays than most, but my thought is: This is what you look at for every iPad activity, and it’s also your entire interface for interaction with the device.

The screen is awesome, but the Web isn’t ready for it

Text is supremely clear, making Web pages really pop; the browser is fast to render and navigate. I’m also loving the screen for my Kindle books. Low-resolution images on the Web look terrible, however, and this affects some apps too. I was browsing homes on Zillow last night and all the pictures of properties looked like a pixellated CompuServe page from the early 1990s. (That means poor if you are too young to know what our old dial-up Web was like!)

That will change over time, but for now, the new Retina display shines a spotlight on these low-quality images. I am also not thrilled by 1080p videos; sure, they look great, but they have black bands above and below the picture. I actually get nearly the same size and perceived quality with a 720p movie on my 7.7-inch tablet and its 1280 x 720 resolution.

Apps that can take advantage of the new iPad are excellent

I have a mix of apps on the iPad, some that are optimized for the Retina display and many that aren’t. The former are fantastic, and the latter aren’t a problem. Real Racing 2, for example, was quickly optimized and you can immediately see the extra detail in the vehicles: improved reflections and shadowing, which make the game more realistic. And the new quad-core GPU in Apple’s A5X chip powers the graphics handily.

Older apps benefit from the chip too and are pixel-doubled to fit the full iPad display. They are not as clear as software built specifically for the Retina display, but they appear at least as good, if not a little better than on older iPads. That’s important, because there are relatively few apps specifically made for the new iPad’s display. Instead of scaling up low-resolution phone apps, which is what Android tablets initially did, Apple is scaling up tablet apps. That means all the controls, text, images and such fit the screen and are rendered in the proper size. The same apps work across all iPad models as a result.

Finally: a usable camera in a tablet

Most people suggest that using a tablet to take pictures simply isn’t done because it looks silly to hold up a giant viewfinder. There’s merit to the argument, but I would suggest an additional reason: No tablet camera has been good enough to bother using over a smartphone camera. Unless you have an iPhone 4S, the new iPad’s camera is good enough. Why? It’s the same hardware found in the iPhone 4, which is the most used camera on photo-sharing site Flickr. I haven’t taken a bad shot yet with the iPad. Here’s a recent example:

I will take things a step further: By pairing this camera with a super high-resolution display and improved — or in the case of iPhoto, new — imaging software, I think more people will turn to their iPad for stills and 1080p video. Add in the connectivity of Wi-Fi or LTE and the new iPad truly is a portable video studio. Will folks with a DSLR or professional photographers dump their cameras for iPads? Nope, but most people buying an iPad will be more than happy with the camera’s capabilities.

Minor gripes and overblown issues

Since this meme has been hitting the rounds of late, let me assure you: Yes, the iPad can run warm. That’s not surprising, considering it has the Retina display and essentially the same computer chip as last year with added quad-core graphics. Apple didn’t do a major chip redesign on next-generation ARM architecture, so it shouldn’t surprise that the chip can run hotter, especially when gaming in high-def or better. And the new display requires far more power to backlight: 7 watts at full brightness vs. 2.7 watts on the older iPad. More power usage generally means a warmer environment. But while the heat difference is noticeable, I haven’t found it to be an issue.

I would have liked to have seen a higher-resolution front-facing camera in the new iPad, but hey, Apple has to leave something to improve for next time, right? The FaceTime experience is generally no different as a result. Also slightly disappointing to me — although iPad LTE owners are surely happy — is that there is no battery-life improvement on the Wi-Fi model, even though the battery capacity of Apple’s tablet is 70 percent greater. Again, it comes down to the display, which uses up the juice. Still, I can use the iPad all day as a primary device and easily make it through the day on a single charge, so battery life isn’t an issue.

The real difference between the iPad and “the others”

Again, I’m not trying to start a platform fight here, but it’s worth mentioning that you give something up when deciding between buying an iPad or an Android tablet — or a Kindle Fire, for that matter. But you gain something at the same time, and perhaps this will help people decide which tablet is best for them. I am intentionally omitting any jailbreak, rooting or custom ROM arguments, because if you know about them, you already know which tablet platform is best for you.

With iOS, you give up the ability to have total control over your device. Apple’s iOS software sets the limits of what you can and can’t do. The iTunes App Store is the app gatekeeper: If an app you want isn’t there, you can’t get it. And if you want the ability to use a storage card, you have to buy Apple’s camera kit accessory. In return, you get synergy: well-designed hardware that works extremely well with its specific software and a wide media ecosystem to boot.

On the Android side, you generally have total control to make your device look the way you want and run the apps you want. You can even have intelligent apps control your hardware so that when you leave your home, the Wi-Fi radio is disabled to save juice, for example. Apps come from Google’s store, but a developer could also post their software installation on the Web and you can use it. You also have a vast range of hardware to choose from. The downside is that all of this freedom and choice can be maddening for software developers and for carriers to keep the devices up to date. And you’re also giving up personal information with integrated Google services for its ad business.

Amazon’s Kindle is more like the Apple approach but built on Google’s software. There is a clean, simple interface that focuses on the primary activities Amazon can offer: Web browsing, e-books, music, videos, curated software and Amazon’s own storefront. You have less control, but for a low starting price, you are giving some of that up for an integrated experience. If you use Amazon’s Silk browser, you’re turning over your surfing habits to Amazon instead of Google.

Is the new iPad “the best” tablet?

Which is best? That’s a personal decision. I have used devices across all platforms, and there’s no one-size-fits-all solution. For most, however, the iPad is the closest to that, given its leading sales figures. And ultimately, you have to make a decision on which platform you want to use first. Interestingly, I have been running the developer preview of Mac OS X 10.8 for the past two months on my MacBook Air, and because of that, I’m turning more and more toward the iPhone and new iPad.

Integration of notes, reminders and notifications — all features that started on iOS — are now part of the desktop experience. I’m finding that to be a huge benefit as the iOS/OS X environments keep these data points in sync for me, and I think others will feel the same way after Apple releases OS X Mountain Lion this summer. Between that and the impressive new hardware, the company is sure to generate even more record sales for its new iPad, which offers a great tablet experience for the broadest range of activities in exchange for Apple’s constraints.

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“With an HD screen, faster processor and higher-resolution camera, we believe this device will drive demand for faster connectivity,” UBS senior analyst John Hodulik said in research note. And given Verizon’s superior LTE coverage, Hodulik said, Big Red definitely has an edge over AT&T when it comes to selling the iPad.

UBS said that previous generations of iPad split 60/40 between Wi-Fi only and 3G models (numbers supported by other studies), but whether those 3G iPad owners actually connected their tablets to EV-DO of HSPA networks is a different question altogether. Wireless industry analyst Chetan Sharma found that only 1 out of every 10 tablet sold connects to a wide-area wireless network. Considering the iPad is the best selling tablet by a long shot, Sharma and UBSs’ numbers don’t quite gel – unless a lot of people are buying top-of-the-line iPads and simply not signing up for mobile service.

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