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10/24/2012
10:40 AM
Eric Zeman
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iPad Mini: The Great Price Debate

The entry-level iPad Mini costs $329, which raised some eyebrows. Here's why analysts say the iPad Mini is priced right--and will steal sales from $199 Android tablets.

iPad Mini Tablet: Visual Tour
iPad Mini Tablet: Visual Tour
(click image for larger view and for slideshow)
Apple announced the iPad Mini on Tuesday. The smaller tablet features a 7.9-inch screen, 16 to 64 GB of storage, a 5-megapixel camera with HD video capture, and a dual-core A5 processor. Early hands-on impressions of the device give it a lot of credit for being so thin and so light.

Specs aside, one thing that has sparked a lot of discussion is the iPad Mini's price. The entry-level version (Wi-Fi only and 16GB of storage) costs $329. Many were apparently surprised by what they consider to be the high price. There was an expectation that Apple would price the iPad Mini competitively against the $199 Amazon Kindle Fire HD and the $199 Google Nexus 7.

[ For more on Apple's diminutive new device, see Apple iPad Mini: Pros And Cons. ]

Perhaps some people have forgotten that this is Apple we're talking about. When has Apple ever made cheap products? Never, as far as I can remember. Apple has always commanded a price premium for its gear, and the iPad Mini demonstrates that Apple isn't about to alter this strategy.

Speaking to Reuters, Apple VP Phil Schiller said, "The iPad is far and away the most successful product in its category. The most affordable product we've made so far was $399 and people were choosing that over [7-inch tablets]. And now you can get a device that's even more affordable, at $329 in this great new form, and I think a lot of customers are going to be very excited about that."

When you look at Apple's i-device lineup, there's not a lot of wiggle room on the pricing.

The new iPod Touch costs $299 for the 32GB version and $399 for the 64GB version. The iPod Touch has a 4-inch screen.

Then there's the 2011-era iPad 2, which is still available. Apple sells it for $399. This is, of course, followed by the fully featured iPad with Retina Display at $499.

Clearly, the iPad Mini had to be priced between the $299 iPod Touch and $399 iPad 2.

Cannacord Genuity's Michael Walkley told his investors today that the iPad Mini is priced exactly right. "We believe the iPad Mini has raised the bar relative to lower-priced competing tablets with impressive hardware specifications, competitive pricing, and the leading software ecosystem that includes over 275k iPad-specific applications. In addition, we believe Apple's pricing of the iPad Mini ($329 for Wi-Fi-only, $459 for 4G base models) will enable Apple to maintain dominant share of the growing tablet market by providing better hardware and a much more integrated and robust user experience at competitive pricing versus lower priced competing tablets."

In other words, the iPad Mini is set to eat the lunch of the $199 Android tablets, even though it costs $130 more.

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Harry Devlin
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Harry Devlin,
User Rank: Strategist
10/24/2012 | 7:41:24 PM
re: iPad Mini: The Great Price Debate
Very good move on pricing. You don't want to set a price that leaves money on the table. I predicted $329 months ago.

We kind of knew that the iPad Mini was going to have a 1024 x 768 screen, even though this is much lower pixels per inch (PPI) than the competition. I was hoping that the premium price would be accompanied by a screen PPI at least comparable to the Nexus 7, but it was not to be. At that PPI, the iPad Mini is not going to be purchased for use as an e-book reader. My daughter just went off to college with a Nexus 7 because she wanted a 7" tablet with a high-resolution screen to use for e-books, and she thought the iPad 3 was too big.

The other big drawback to the iPad Mini, in my opinion, is that you don't get a GPS unless you purchase one of the models with a cellular modem. This has always been the case with iPads, but I was hoping that since the competition includes the GPS on Wi-Fi only tablets (which constitute more than 90% of tablet sales) that Apple would decide to include it as well. The smaller tablets are ideal for travel use, and having a GPS is essential.

Still, a great many people will buy the iPad Mini without realizing its drawbacks. Then Apple can introduce the iPad Mini 2 next year with a higher resolution display and a GPS (the USB port isn't going to happen), and sell these people the upgraded model, since by then they'll have purchased a lot of apps and won't want to switch ecosystems. Very clever move by Apple.

It's not unlike the iPhone progression where they left 3G and voice dialing off the original iPhone, or how they left LTE off the iPhone 4/4S, and how they left NFC and simultaneous data and voice off the Verizon and Sprint versions of the iPhone 5. With NFC missing, they kept something for the iPhone 6. Even though the Samsung commercial that points out the lack of NFC is very amusing, it's unlikely that the lack of NFC cost Apple more than a handful of iPhone sales. Not unlike the iPad progression either, where the first model had no camera, the second model had a mediocre camera, but the third model had a very good camera and a better screen.

People criticize Apple for being behind the competition in terms of features and capabilities but they need to understand that everything Apple does in terms of deciding when to add features and capabilities is carefully planned to maximize revenue and they're doing a very good job at this. Be happy that a U.S. company is selling lots of products that are popular all over the world, even if the products aren't manufactured here. Apple employs a lot of people in the U.S. in design, programming, and sales & marketing.
MikeGäó
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MikeGäó,
User Rank: Apprentice
10/24/2012 | 8:20:36 PM
re: iPad Mini: The Great Price Debate
Money on the table? Money in the pocket and ipads in the warehouse. There were plenty of gasps when the price was announced and the silence from the people at the conference was comical. This was yet another dumb move from Apple. Most people in this part of the market will go for the 199 hd vs the 329 sd tablet. I took a small poll around the area and not a single response was in favor of buying this rotten apple.
Jjmfe
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Jjmfe,
User Rank: Apprentice
10/24/2012 | 8:20:38 PM
re: iPad Mini: The Great Price Debate
Ditto on the pricing. Well placed, it fills a conspicuous hole in their product line and I'm sure will be a popular entry level item this Christmas. Would I buy one.... meeeh, probably not so much, right now, but that's based on what I use a tablet for. I want my tablet as a content consumption device with minimal on device production. I want to use it as a speaker prompt for public speaking, without having a full laptop with keyboard in front of me. Many of us MS Office devotees are using the cloud, are now more incentivized to convert to Apple's office suite, i.e. Pages, Keynote, and Numbers because Apple's cloud and those 3 applications automatically, painlessly push documents to all devices with zero set-up required. That makes iPad a powerful, and easy public presentation tool. I can create on my computer, and it's automatically on my 10" iPad for presentation. Now if I'm just using a tablet as a travel device the 7" becomes more compelling to me. The 7" device clips into my folder along with a legal pad for paper notes (yes, yes, I know, I'm not weaned from paper quite yet.) and I'm ready to travel. My 59 year old eyes don't want to check my flights and read and do all that other stuff on my smartphone, and I don't want something the size of a Samsung Galaxy as my full-time phone. The 7" hits my sweet spot for a travel tool, a go everywhere tool, but the current 10" is going to be my primary go-to tablet at home and in the office.
Andy Atkins
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Andy Atkins,
User Rank: Apprentice
10/25/2012 | 12:01:44 AM
re: iPad Mini: The Great Price Debate
Mike, you so smart. Unsold iPad mini's sitting in the warehouse because they cost too much and you and your friends say you aren't buying one? Another dumb move from Apple? I guess all those dumb moves are responsible for their share price currently sitting at over seven times what it was four years ago making them the most valuable American company in history. You certainly know Apple's business better than they do. You are deranged if you really believe all the crazy things you say. They priced it perfectly in an attempt to balance supply and demand for the holiday season while preserving their amazing profit margins. Demand will probably still exceed supply. Now it will sell out and go on back order in 5 days instead of 2. It will be the most sought after gift for Christmas. If you have kids they are going to be disappointed come Christmas morning. iPad mini's will be going on eBay for $50 over list price rather than the $100 it would have been if apple priced it a $279 and Apple will keep that extra fifty bucks times at least ten million, like half a billion dollars/over half a buck a share extra right there, genius, if you like money. After Christmas, in about six months, they will mark it down to about $279 when version 2 comes out. Put that in your corn cob pipe and smoke it.
Steve W
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Steve W,
User Rank: Apprentice
10/25/2012 | 2:50:50 AM
re: iPad Mini: The Great Price Debate
Oh, the irony!

Apple did introduce one competitively priced product: the original iPad was introduced at $499.00; approximately half the expected price, and less than every tablet then in production or development. It was "back to the drawing boards" for everyone else.

The first iteration of the iPad mini, the Newton Message Pad, was 7.25" H x 4.50" W x 0.75" D, weighed 0.9 pounds, and sold for $699. The iPad mini is thinner, lighter, and costs half the price. The 20 Mhz ARM processor has been upgraded to a dual core A5 rumored to be 50 times as fast. The 4 MB ROM has been upgraded to a 16 GB SSD. The optional 9,600 baud modem has been replaced with an optional LTE cellular package.

The Message pad did have two "advantages" that all Apple haters would approve of: It was powered by removable AAA batteries, and came with a stylus.

Sorry, Apple! The Message Pad was judged to be "too big for normal pockets", and the iPad mini is taller and wider. One third the thickness is not good enough. Didn't Palm teach you anything?

[/sarcasm]
vksbbr
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vksbbr,
User Rank: Apprentice
10/25/2012 | 9:35:13 AM
re: iPad Mini: The Great Price Debate
hohum
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hohum,
User Rank: Apprentice
10/25/2012 | 11:33:51 PM
re: iPad Mini: The Great Price Debate
Well thats hype... ( not that I expect anything else)
I wonder why saying "I think they are wonderful"
is a justification of usability?
It will be interesting to see the response over time( after the intial fanboi purchases)

IPAD sales are on the decline and this is even a smaller niche market.

But I am sure it will be someone elses fault... as always
ANON1244118138979
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ANON1244118138979,
User Rank: Apprentice
10/26/2012 | 2:07:34 PM
re: iPad Mini: The Great Price Debate
Hurry sheeple, a new iDevice!!! Dont walk, RUN to your nearest Apple store and line up!
gtigerclaw
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gtigerclaw,
User Rank: Apprentice
10/27/2012 | 12:38:29 PM
re: iPad Mini: The Great Price Debate
I know that I read where the Apple PR department put out a press release on Friday saying that they sold out iPads on pre-order in the first 20 mins. Rumors were that they ordered 10 million from their Chinese slave shop to get started.

Does anyone know if this is true or another Apple rumor trying to jack-up flagging share prices?
ANON1235574790004
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ANON1235574790004,
User Rank: Apprentice
10/27/2012 | 1:21:10 PM
re: iPad Mini: The Great Price Debate
Since I purchased my Samsung Tab2 for that price, used it all week at Gartner Symposium, used their app for the conference all week, charging it on Sunday, then not again until Friday, I have no sympathy for those paying twice the price for the Apple products. I see why Apple is suing, as they will slip again, just as they did with Macs versus PC's once the competition is recognized as real and better value. Apple will have to innovate to keep winning, but we're not seeing much of that with follow-on variances of existing products.
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