iPad Mini To Be Priced Competitively

Apple is prepared to defend itself in the tablet market, a market it largely defined with the iPad in 2010. Though former CEO Steve Jobs famously dissed the idea of creating a 7-inch tablet, The New York Times says that's exactly what Apple is prepared to do in order to protect its turf.

The iPad Mini, which has not been announced or even acknowledged by Apple, will offer a 7.85-inch display, according to the Times' sources. Reports from The Wall Street Journal and Bloomberg in recent weeks have also suggested the device will have a 7.85-inch screen. None of the reports has included information about the iPad Mini's potential screen ratio. Will it be the same as the iPad with a 4:3 screen, or will it be something closer to 16:9?

Adding a smaller tablet to its device roster, which would join the iPod Touch, iPhone 4S, and new iPad, doesn't guarantee Apple any sort of success. A smaller screen and more transportable footprint don't ensure a winner. That's why the price of the iPad Mini is crucial.

The iPod Touch sells for $199-$249 and the new iPad sells for $499-$829, depending on options. Looking at the entry-level prices of $199 and $499, the price gap doesn't leave Apple a lot of wiggle room to price the iPad Mini. According to the Times, Apple "is likely to sell for significantly less than the latest $499 iPad." That could mean anything, really.

Apple has new competitors to worry about. The Amazon Kindle Fire costs $199, as does the new Google Nexus 7 (made by Asus). The Nexus 7 runs the latest version of Android and includes a 7-inch display. It's one of the best Android tablets on the market and the $199 price point for the 8-GB model makes it a very attractive option for consumers.

[ Learn 10 Ways Kindle Fire 2 Must Top Google Nexus. ]

The one niggle for Google, however, is that the $199 price point doesn't leave it much room when it comes to margins, at least for the 8-GB model, which costs the company $152 to build. It has more room for profit on the 16-GB version, which costs Google/Asus $159 to manufacture, but sells for $249.

Personally, I don't see how Apple could charge less than $299 for an iPad Mini. That would give it a $100 price point above the entry-level iPod and still be "significantly less" than the $499 iPad.

Apple is expected to announce the iPad Mini later this year. The device itself is expected to reach the market before the holiday shopping season kicks off.