iPad Mini: Here’s Why Apple Thinks $329 Works
For those criticizing Apple (NASDAQ:AAPL) for not being aggressive enough with its iPad mini pricing, Phil Schiller has an answer: It’s the best money can buy. Apple unveiled its new 7.9-inch tablet on Tuesday at an event that took the battle straight to its rivals by comparing the iPad mini’s specifications with that of a Google (NASDAQ:GOOG) Nexus 7. However, at $329, the new Apple tablet starts at $130 more expensive than the Nexus and Amazon’s (NASDAQ:AMZN) Kindle Fire HD.
Schiller said he believed consumers would see the iPad mini as a premium product in front of the cheaper devices from Google as well as Amazon. He cited the success of the full-sized iPad, which has continued to be the market leader despite the arrival of new competition.
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“The iPad is far and away the most successful product in its category,” Schiller told Reuters. “The most affordable product we’ve made so far was $399 and people were choosing that over those devices. And now you can get a device that’s even more affordable at $329 in this great new form, and I think a lot of customers are going to be very excited about that,” he added.
Apple’s iPad took 70 percent of the tablet market in the second quarter of the year, according to iSuppli, though that did not include sales of the Nexus 7, which launched in July, and the Kindle Fire HD, which arrived last month. Schiller maintained that the iPad’s market dominance was unmatched.
“Others have tried to make tablets smaller than the iPad and they’ve failed miserably,” he said during the event. “These are not great experiences.”
Janney Montgomery Scott analyst Bill Choi agreed in his own assessment of the iPad mini, saying the device did not have to compete on price at all.
“The highly anticipated iPad mini was announced at a $329 entry price point, which was largely in line with our expectations,” Choi wrote in a note to clients. “At this price point, iPad mini targets the incremental opportunities for smaller tablets (e.g., 6-16 year olds and women) without disrupting existing product line-up in iPad and iPod Touch. We don’t think Apple needs to compete aggressively on price against mini-tablets from Android; Apple continues to sell a premium product in the fast growing tablet market at premium price points.”
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