Is it Really All About iPad mini Pricing?

October 25th, 2012

So the discussion about the iPad mini, the early release of a fourth generation full-size iPad, the promise of the ultra-thin iMac, Fusion Drives, and other Apple related stuff continues to consume the tech media. As usual, some segments of the media appear to be in way over their heads in trying to assess what’s going on.

Take the pricing. At $329, the iPad mini seems a mixed bag. After all, you can buy a 7-inch Amazon Kindle Fire HD for $199; same for the Google Nexus 7. So why pay more for a tablet with a “mere” 7.9-inch screen for $130 extra?

Well, there is the fact that the iPad mini’s screen real estate is about a third larger and, when viewed in the landscape position, the display depth is two thirds more, meaning that you may actually see more of a Web site than the headers without scrolling. All right, the Amazon and Google tablets are useful for widescreen movies, but not much else.

Is that larger, more useful screen worth the extra cost for the iPad mini? What about an elegant, relatively easy-to-use OS, with 275,000 apps optimized for the platform? Even if specs and real world performance aren’t demonstrably better than the competition, those factors alone should make the iPad mini a compelling choice, well worth the premium.

I won’t get into extended arguments about the limitations of 7-inch Android tablets, where there are few apps optimized for those products, OS fragmentation and frequent performance lapses. With the Amazon tablets, it’s all about providing a pretty front end for media consumption and, of course, to make it easier to buy products and services, the better to overcome the lack of profit on the sale of the Kindles.

Yes, I do suppose some people are concerned about the starting price, but it’s not as if Apple ever sells much of anything at a loss, or with little or no profit. And don’t expect the iPad mini to get cheaper. It’ll get faster over time, no doubt earn a retina display, and the already thin form factor will get thinner and lighter. But the price probably won’t change.

The surprise in Tuesday’s announcements, although some expected it, was the fourth generation iPad, a simple refresh with faster components. One commentator, who will go unnamed, suggested Apple was making a big mistake coming out with a new new iPad so soon. Or maybe Apple took the smart move, which was to leverage the capabilities of the A6 processor family, add the new Lightning port, and provide significant performance boosts in most significant respects. This way Apple enters the holiday season with an invigorated iPad product line, ready to do battle with all comers, including the Microsoft Surface. And don’t think the Surface didn’t have something to do with the rapid arrival of a fourth generation iPad.

This hasn’t stopped some from suggesting that the iPad should have been lighter and thinner, but the fast time to market — at least for Apple — may not have offered enough time for that sort of revision, or maybe Apple is waiting for newer components to leverage such a design, such as a larger version of the in-cell display that premiered last month in the iPhone 5.

So I suppose there will be a fifth generation iPad in the spring of 2013, assuming Apple is now committing to a six to seven month upgrade cycle. Will that happen to the iPhone 5? Why predict what Apple does, anyway? I would assume if sales dipped, or didn’t increase as fast as they hoped, they would revise mobile products sooner than the presumed timetable.

Actually, of all the new products that debuted this week, I’m most intrigued by the 2012 iMac. Having a thickness of 5mm is certainly a fascinating choice, but don’t forget that the depth thickens gradually and is far more than 5mm at the middle. That’s just design fluff.

I’m more intrigued by the fact that it weighs eight pounds less. In recent weeks, the result of moving to a new home, I had to lug my 2009 27-inch iMac from home to hotel (while the new place was being readied) and to the new residence. Stored in the original shipping carton, the iMac, though a lot lighter than a Mac Pro, was still awkward to carry, and it didn’t help that I injured my back during the move process. However, if the 2012 iMac was no different from the immediate predecessors externally, I would still give it serious consideration. Yes, I’m somewhat disappointed by the loss of an optical drive, but, as Apple VP Phil Schiller told the media, you can always get an external USB SuperDrive if that’s what you really need. It may just be the crutch that few will buy after a while.

But I’m most intrigued by Apple’s variation on the hybrid drive theme, known as Fusion Drive. In the standard hybrid scheme, there is a SSD cache of 64GB for your frequently used stuff. Apple uses a more intelligent data transfer scheme, where the files are actually moved to a 128GB cache based on how often they’re opened, plus the OS of course. If you can, as advertised, get most of the performance of a dedicated SSD for a $250 premium — that price is based on the upgrade cost for a 1TB Fusion Drive on the Mac mini — it would be a hot ticket. Once you’ve used SSD, as I have with a client’s 2011 iMac, you’ll never go back. It’s that good.

All in all, Apple did good this week, and really upstaged Microsoft, who launches Windows 8 and the Surface tablet on October 26. That, and the fact that early Surface reviews are a mixed bag in ways that Microsoft doesn’t like, the software, augers well for a successful holiday season for Apple.

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3 Responses to “Is it Really All About iPad mini Pricing?”

  1. David says:

    If you think about it Apple made the only choice they could with regard to iPad pricing. They maximize profit by driving as many people as possible to the 4th generation full size iPad.

    The decision to spend an extra $100 to go from the iPad 2 to 4th gen. is a no brainer even if you’re on a tight budget. The two products are simply night and day when it comes to capabilities and future support so resale value alone should be enough to justify it.

    The iPad mini is really an iPad 2 with some upgrades (wireless, camera, etc.) over its big brother. That forces Apple to have a minimal price gap between the two models.

    The internet seems to think Apple should have sacrificed margin to push the iPad mini. Ignoring that Apple never sacrifices margin for anything let’s hypothetically cut the price to a psychologically more appropriate $299. They lose $30/unit, but make it up in added volume. So far so good.

    But a lower mini price would have made it nearly impossible to price the larger but somewhat inferior iPad 2 at $399. So they’d have to cut that price too. Again margin is sacrificed on the altar of volume. But they don’t want to sell more iPad 2s. In fact I’d say they don’t want to sell ANY iPad 2s at all. I believe that it’s only available to make the other models look good.

    Replacing the iPad 2 with the iPad 3 would have been even worse because it would have stolen a substantial number of iPad 4 sales and made the iPad mini look bad.

    While I agree with critics that the iPad mini is priced above an important psychological threshold, Apple really had no choice.

  2. AdamC says:

    My take on the pricing of the iPad mini is it is cheap enough to put the final nail in the PC market.

    Many will be buying the mini just for consumption of the web because that’s what they do with the desktop pc.

    Apple just can’t win now they shorten the new product circle of the iPad, pundits are writing that they are playing with the wallets of the consumers. The don’t whine when Apple competitors come out with a new product every six month.

    But I believe it is Tim Cook way of telling the analysts and punditiods (can’t help myself) what Apple are capable of and they dare to put the money where their money is.

    Their are still as innovative as ever and they are also distancing from their competitors by coming out with better designed products that are the best in their class. And I hope they don’t lock down their product as individual cannot upgrade simple things like the RAM chip themselves.

    And I don’t believe we will this kind of products renewal again.

  3. Shameer Mulji says:

    “Apple just can’t win now they shorten the new product circle of the iPad…..”

    No doubt Apple shortened the product cycle of the iPad – for this year. To say they’ll do the same every year is an assumption. Another possibility is they’re shifting their release schedule so that all iOS devices are released in the Fall.

    “And I hope they don’t lock down their product…”

    As far as their mobile products go, like it or not, I think this is inevitable. With the exception of the classic MB Pro, all new mobile products use solid state storage and are locked down. A user cannot upgrade RAM in the 21″ iMac even.

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