After yesterday’s introduction of the iPad mini, Phil Schiller, Apple’s Senior Vice President of Product Marketing, found himself defending its $329 price tag. While Apple’s biggest competition in the category of smaller tablets, Google and Amazon, price their small tablets starting at $199, Schiller defended the iPad mini as a premium product worth the higher price, and said that customers understand this and are willing to pay. Schiller highlighted this at yesterday’s press event, drawing direct comparisons to Google’s Nexus 7, as Noel Randewich and Poornima Gupta for Reuters report:
Apple is under pressure to defend its dominant position in tablets, a market it created with the launch of the first iPad in 2010. The intensity in the marketplace was evident in Tuesday's unveiling of the iPad mini as Schiller took the unusual step of doing a side-by-side comparison of the smaller iPad and Google's Nexus 7 tablet.
“Others have tried to make tablets smaller than the iPad and they've failed miserably," Schiller said during the event. "These are not great experiences."
On stage yesterday, Schiller compared the iPad mini’s app experience to that of the Nexus 7, and said that while the Nexus 7 runs blown-up phone apps, the iPad mini runs full iPad apps. This is one of the main selling points for the iPad mini, that it is a full iPad and that the app experience reflects that. Schiller also tauted the decreased weight of the iPad over the competition, despite the fact that the screen area is 35% larger than the Nexus 7.
Unlike Amazon and Google, who are selling their tablets at or close to cost, Apple always looks to make a substantial profit on its devices. This is reflected in the price of the iPad mini. Apple can afford to make a $250 tablet, certainly, but to generate the profit that they want to out of the device, they sell it for a higher price. They are not selling a cheap tablet, they are selling a cheaper iPad. That might be enough. Despite the existence of cheaper rivals, the iPad has held on to a large majority of the tablet market for over two years now. With the iPad mini, Apple seeks to continue that dominance by betting that what people don’t want a small, cheap tablet, but rather a smaller iPad with a lower price tag. Time will tell if they are right.
What do you think about iPad mini pricing? Is it too high, or are you getting what you pay for?