“Tablet makers have failed to compete with Apple in the $400-and-up market segment, and a new, smaller iPad priced below $300 is only expected to make matters worse for the competition,” Neil Hughes reports for AppleInsider.
“Analyst Shaw Wu with Sterne Agee said he believes Apple’s so-called ‘iPad mini’ will prove to be ‘the competition’s worst nightmare,'” Hughes reports. “He noted that competitors are already struggling to compete against the $399 iPad 2 and $499 iPad, and Apple hitting an even lower price point will only expand its share of the tablet market.”
Hughes reports, “Wu doesn’t believe Apple needs to hit the $199 price point and match Google and Amazon. In fact, he thinks Apple could sell its smaller iPad for around $350 and it would still be a success.”
Read more in the full article here.
Now they’re forced to dwell further at the bottom. Poor guys are in their headquarters now like “Jeez, how the hell we gonna make a $99 tablet?” And Apple can always squeeze even harder by leaving previous gens of the iPad mini on the market at cheaper prices after they release new models.
There’s nowhere to hide this time. Tim Cook’s pulling a Godfather. Tessio, Barzini, Moe Greene… everybody gets whacked.
When the second gen iPad mini hits and the first gen gets dropped to $199, watch out Android manufacturers!
More than a bare bones nightmare, the iPad mini will be like a succubus & incubus to Android sucking its lifeblood, draining Eric the Mole’s blood, leaving him a dried out husk.
I love your takes, it’s laugh out loud time with a dash of cruel chuckle. But so true.
Satisfyingly visceral, cruel, and true.
But Apple will ensure it’s success with a price of $249 or less. They must eliminate any perceived Android advantage, which can only be price in the mind of plain old Joe the consumer.
The advantages of the halo effect, sales through the ecosystem are benefit enough to justify a little less profit…. Plus the big benefit of forging ahead with Job’s desire to go “thermonuclear”… This might be the device to create the mushroom cloud.
I don’t know if they’ll go that cheap or not. I’m not sure they have to. Google and Amazon don’t make any money on the sale of the Fire and the Nexus 7; Amazon said as much.
Apple doesn’t have to do that. They can price the iPad mini at $299, get good sales volume and market share doing it, and let Amazon and Google fight over the “we’ll make it up in volume and content purchase” table scraps.
All will be revealed in a few days!
I have a different take:
Apple has been baited into playing at the cheap, no margin end of the computing spectrum.
Apple cannot win on price, they have an ecosystem to maintain and high quality reputation to uphold. The competition will always underprice their crapware. Now Apple, in a poorly planned strategy, has decided to offer a me-too product to cater to that tiny niche of the market of purse-toting paperback readers who aren’t fit enough to tote around that oh-so-heavy iPad, or are too cheap to buy a fully capable iPad.
Apple would be better served getting its iPhone production straightened out, its Mac Pro revamped, and some serious attention placed on the power computing end of the market that Apple seems to have abandoned to Microsoft: small business, servers, education, eventually corporate servers, etc.
I agree.
I do not believe this is a tiny niche market.. As a matter of fact I believe that once Apple enters the 7 inch market it will be the most popular form factor…, for almost every business application the smaller form factor is much more convenient. Medical users can put it in a coat pocket, auto mfgs will flock to it for in dash applications… 7 inch tablets, except for web browsing is actually better for most users…
Apple has a corporate culture hatred for Google…. If they can start down the path getting rid of Samsung as they are for it’s betrayal believe me they will price this thing to inflict a hurtin on Google…
Mobile search is HUGE …and growing . And owning mobile search will put a hurting on Googles ad revenue something fierce …. It is the reason for Google latest stock drop… Apple is staffed by people…, great people to be sure but people…. And people can be vindictive when they perceive they are the victims of an injustice ….Apple is to smart to hurt themselves, but they are in a unique position to take less profit to inflict damage to the arch enemy… That 100 billion is there for a reason.
I agree with your assessment. This is a great story for our times.
There are larger issues at stake here than narrow business projections…we are witnessing a retelling of the Iliad, the saga of Achilles’ rage against injustice.
Steve Jobs = Achilles
I might agree with this assessment if Apple were releasing a 7 inch iPod touch, a blown up 16:9 device running iPhone apps.
But the iPad mini is more like the MacBook Air. They’re simply downsizing the iPad in order to create an extremely light and thin and ultra-portable device as can’t be achieved with a 10″ iPad. I believe we will see proportions from the iPad mini in terms of weight and thickness that will never be seen in the regular iPad. This will still be an iPad running spacier, more functional tablet apps compared to other 7 inch tabs relegated to blown up phone apps. It is indeed a premium product that’s a cut above the competition, so I don’t see any bottom feeding here.
Again, like the MacBook Air, the cheaper price is secondary. A welcome side effect. The iPad mini will be borne of the goal of making the iPad as small and thin and light as possible, not creating a cheap tablet. That’s how we’ll know it’s not a sign of Apple losing their way.
I would agree if this was “normal” product … But it’s chief reason for being is to prevent it’s Android completion from having any haven in the tablet market … $249 or less … iCal it … And we will talk after Oct 23rd… :=)
And don’t neglect the attractiveness of this form factor and price for K-12 school systems.
How is releasing an iPad mini drawing attention away from straightening out the iPhone 5 production problem. They’re not mutually exclusive. The iPhone 5 production bottleneck is caused by the new process of anodising the aluminium back shell instead of the glass back of the iPhone 4S.
Even if there were no iPad mini, production bottlenecks for the iPhone 5 will still exist, until such time production catches up with demand. This is a recurring theme for every iPhone release stretching back to 2007, and the 5 is no exception to this.
As for going for a lower price model and sacrificing profits in the mean time, how do you propose extending the iOS ecosystem if you do not capture the lower end of the market. If you want iOS to remain a niche player like Mac OS X, then by all means only release high priced products. But the network effects of a broad and deep iOS ecosystem by developers developing apps first for the platform will be jeopardised if the market adoption rate drops to below sustainable levels.
The very fact that Apple brought out the iPad has contributed positively to the top and bottom line. Only if you’re losing money selling the iPad does this prospect not make sense, like Microsoft dumping money on search (Bing) and XBox. Clearly this is not the case, Apple is still making money on every iPad mini sold, albeit at lower margins. But that is a function of being in the consumer market – you need a vibrant ecosystem to attract new entrants and maintain existing customers. And a vibrant ecosystem can only result from a broadening of the product base and in doing so broadening the customer base.
Why do you think that at every presentation of new product releases, the latest one being the iPhone 5 launch, Tim Cook stresses the number of iOS devices out there – 400 million at the latest count. Obviously Apple is taking a new tack of pumping out as many cars (mobile devices) as it can while the market is hot for cars. Since the truck (PC/Mac) market has cooled somewhat, Apple will dedicate its resources where it obtains the highest returns.
As an IOS developer I believe you have correctly added weight to the argument for an aggressively priced iPad Mini. Too many reasons not to price to own this tablet market.
MS lost money on Xbox when they started it… but make no mistake, it’s a very profitable venture for MS. It moves their income statement. This is considerable when you think about within the entire Windows ecosystem, it is making a tonne of cash for them.
I disagree..
Apple is already winning the tablet market on price (never mind usability). Manufacturers are having great trouble producing something of equal quality at the same price as apple.
The mini will be no different. Apple can now due to its enormous volume and buying power sell the mini at a price that will be hard to match.
That said, I think $199 is an unlikely entry point for the mini.
“Apple cannot win on price”
Apple ALWAYS wins on price in mobile. Given what they offer, the competition is either more expensive with similar features or less expensive with lesser features.
“its Mac Pro revamped, and some serious attention placed on the power computing end of the market”
More wrong than mere words can say… We’re in a PostPC world. What that means for the iMac, can’t say, but I’d be willing to bet that if Apple were to update the Pro, the sales in one month of portable devices would outshine a years worth of profits of any updated Pro. There’s a lot of people that would want them, but nowhere near the number of potential iMac and iOS owners.
The R&D for the iPad mini was finished and paid for last spring.
Apple has a 35% profit on an iPad. Apple can win on price if they want to. Make a 40% smaller product at a 25% profit margin and you have a $200, 16 GB, iPad WiFi.
Its’ just that simple.
Now just go troll in another direction.
With $150 in parts alone and assembly, distribution, sales markups and then PROFIT, how much do you think Apple could sell this fabled iPad mini for?
You have to remember that the high end 64 GB, G4, iPad mini will subsidize the low end 16 GB, WiFi, iPad Mini.
Why other manufactures should give up:
When HP dumped the WebKit Tablet, and you could get it for $99, I called my wife to see if she wanted one. Her response was, “Does it run iPad apps? If not, no, don’t want it.”
Now, when rumors started popping up about the iPad mini, I didn’t have to say anything to her. She told me about it and has been counting the days.
This is the same person who told me, she HATES Macs and will only use PCs. Well she used Macs in the 90’s before Steve came back and was thoroughly disgusted with lockups and panics. I can’t change her mind.
She DOES know the bad old days of the Classic Mac OS and it’s memory issues are way behind us now? So buy an iMac for yourself until she comes sniffing over and smells the sweet difference. She’ll eventually thank you for it.
What is there to speculate about? Apple will price the Mini to make money. This is a fact. They make money on hardware sales. This IS their business model. The Mini will be no less than $299 for 16 GB Wifi.
Second, you are all of you assuming Apple will launch a Mini. It is not clear that they will. They never confirmed this. I doubt they will launch a Mini. I think it’s all disinformation and controlled leaks to take attention away from others.
This event will likely be:
13″ Retina MBP
New Mac Mini
Hence the “Little more to show you”
Maybe Retina iMac and updated Pro to boot as well
But no Mini
Nobody needs tweeners, even from Apple. They won’t do it guys.
But…thirty thousand Internet posters can’t be wrong. Listen. Apple leaked this. That’s their (admitted) advertising strategy. Manage the buzz.
I would like to see Apple use it’s economies of scale to really agressively price the 16 GB iPad mini at $199.
This price should attract schools,fencesitters, students and big iPad owners etc etc..it will beaffordable and appealing to an even wider market. By it’s usefulness it will also act as a sales agent for the full iPad.