Apple's iPad mini pricing questionable

Realizing that the iPad Mini will continue to be popular, Apple is attempting to protect its overall iPad profit margins by using a higher launch price for the iPad Mini with Retina, and also making a minimal price reduction of $30 of the original iPad Mini which will now retail for $299 (€216)
 
As has become customary for Apple product launches, most of the details and indeed images of the new devices had been leaked prior to the event. However, there were two big surprises – the pricing structure of the new iPad Mini and the decision by Apple to continue selling the iPad 2 while eliminating the iPad 4 from its product line-up.
 
The iPad has been a wildly popular device since its launch in 2010 with sales of over 170 million units. During the Keynote, the Apple CEO rightly highlighted quotes from skeptics around the time of the first iPad, who were doubtful that there was demand for such a device. Over the last three and a half years, Apple has launched five generations of its 9.7-inch model and two versions of its 7.9-inch model.
 
Apple initially shunned a smaller version of the iPad but launched the iPad Mini in 2012 – but it appears that the company is still underestimating the popularity of the iPad Mini, with strong indications that it is outselling the larger iPad model.
 
The new model, the iPad Mini with Retina, will come with a number of upgrades, including the Retina display with a pixel count of 2048×1536 and the new A7 64-bit chipset, and a 128GB version is now available. But it is slightly heavier and thicker than previous iPad Mini, presumably due to the retina display.
 
The iPad Mini with Retina will retail in the US at $399, which is an increase of $70 on the Wi-Fi-only, 16GB model of the iPad Mini, which launched at the retail price of $329. It is true that the overall better spec of the iPad Mini with Retina is an improvement on the previous model, but the new 9.7-inch model, called the iPad Air, also features a number of improvements on the previous model. Remarkably, Apple has slimmed the iPad Air by 20%, so it is just 7.5mm thick, and has reduced its weight by almost 30% to 469g and included the A7 chipset – and yet Apple has not changed its traditional 9.7-inch iPad launch price of $499 for the 16GB, Wi-Fi-only model.
 
 
Realizing that the iPad Mini will continue to be popular, Apple is attempting to protect its overall iPad profit margins by using a higher launch price for the iPad Mini with Retina, and also making a minimal price reduction of $30 of the original iPad Mini which will now retail for $299.
 
Consumers looking for a high-performing 7-inch or 8-inch tablet at a low end price will not find such a device from Apple. Instead, tablets with similar specifications as the iPad Mini from rival vendors retailing at $170 less, including the Nexus 7 from Google and Amazon’s Kindle Fire HDX, will continue to be popular alternatives. And it is difficult to see how consumers would pay a $100 premium for the retina display and A7 chip on the latest iPad Mini model, as impressive as both features are.
 
Although the iPad Mini will remain on the market, Apple will only sell a 16GB model. Consumers wanting an iPad Mini with more memory are therefore pushed towards the latest iPad Mini. Apple was keen to promote the number of ways people make use of the iPad, however, it is likely that the most popular use of the iPad is to stream video content. And there is little difference between the viewing experience of the iPad Mini and equivalent models from Amazon and Google.
 
Consumers looking to buy a 9.7-inch model will be presented with a far easier decision. Apple curiously decided to knock the iPad 4 off its product line-up, while continuing to sell the iPad 2.
 
The retail price of the iPad 2 will remain at $399. For $100 more for the iPad Air, consumers will get a lighter, thinner device, more advanced cameras, Bluetooth 4.0, MIMO Wi-Fi technology and Siri.
 
Apple’s new iPad offerings are probably the most refined and well-crafted tablets on the market. However, at the pursuit of higher profit margins, Apple is now backtracking on pricing for its iPad Mini range which may have adverse effects, such as pushing more consumers towards purchasing the first-generation model rather than the second-generation model.
 
Julian Jest is a research analyst for handsets and devices at Informa Telecoms and Media. For more information, visit www.informatandm.com/

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