Apple’s iPad Mini is expected to be announced next week, then go on sale a few weeks later.The only real point of intrigue left around the Mini is its price. In a note released this week, Apple analyst Gene Munster says he thinks Apple charges $250-$300 for the iPad Mini, which would be a surprise to some people.
The reason some people don’t think Apple would charge less than $300 for the iPad Mini is that it charges $299 for a new 4-inch iPod Touch.
The iPad Mini is expected to be 7.85-inches. Bigger equals more expensive, right? Not really. The average selling price of an 9.7-inch iPad is $538 versus $624 for the 3.5-inch iPhone. So, Apple can definitely charge less for a bigger product.
Munster thinks Apple will be able to afford to charge $250-$300 for the iPad Mini because he thinks the iPad Mini will start with just 8 GB of storage, compared to 32 GB of storage on the introductory level iPod Touch. He also believes the iPad Mini will not have a “Retina display” which is Apple’s high resolution display.
It’s hard to imagine Apple releasing an 8 GB, non-Retina iPad Mini. For a company that prides itself on top of the line, premium products, this would feel like a non-premium product released to fend off competition from Google and Amazon.
(Tim Cook on the most recent earnings call: “The most important thing for Apple by far is to continue making the best products in the world and we are very deeply committed to doing this and we’re maniacally focused on it.” Is an 8 GB iPad Mini without Retina the “best product in the world”?)
At the same time, releasing a $250, or even — gasp! — a $200 iPad Mini with a Retina display would likely squeeze Apple’s margins. As smart as Tim Cook and his team is at managing the supply chain, it seems almost impossible to make significant money on a high quality $200 iPad Mini.
Apple can’t afford to be passive here. It re-invented personal computing with the iPad. It can act like an incumbent, protect its margins, and watch rivals come in and eat its market share, thus becoming a marginal player in the market it built. Or it can say, “Investor expectations be damned, we’re going after market share. Our margins will come back later. We’re charging a competitive price for the iPad Mini.”
Apple’s already seen this movie. It defined personal computing in the 80s then lost the market to Microsoft. There’s no way it’s going to let it happen again. If the stock suffers over margin pressure, then so be it. Now is not the time for Apple to be timid. Now is the time for Apple to aggressively price the iPad Mini.
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