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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