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iPad Mini: Is the new Apple tablet priced too high?

The iPad Mini will sell for $329, less than other iPads but much more than competitors such as the Kindle Fire. 

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Reuters
Visitors look over the new iPad mini at an Apple event in San Jose, Calif., on Oct. 23.
  • By Matthew Shaer

As recently as Monday, plenty of folks were speculating that Apple would sell its iPad Mini for $275 or even $250. Well, the slimmed-down tablet computer finally got its grand unveiling yesterday, and now we know the truth – the device will actually cost $329, a full 129 bucks more than both the high-resolution Amazon Kindle Fire and the base-level Google Nexus 7.

Pretty pricey, in other words, for a 7-inch tablet. 

Unsurprisingly, Apple has already found itself on the defensive. In a conversation with Reuters today, Apple marketing chief Phil Schiller maintained that consumers had, in the past, shown a willingness to fork over a little extra for an Apple device.

"The most affordable [tablet] we've made so far was $399 and people were choosing that over those devices," Schiller said, referring to the iPad 2, which saw a price drop earlier this year. "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." Schiller added. 

He's right, of course. Apple has long been able to get away with high prices – even on relatively simple products such as MP3 players and laptops – because Apple fans love the idea that they are buying a luxury brand. Something with real cache. 

It's also worth noting that it's not exactly useful to compare the price of the Kindle Fire to the iPad Mini. Amazon and Apple have completely different sales strategies. Amazon takes a loss on its Fires so that it can sell more Amazon e-books and movies – the Fire is a conduit. Apple, on the other hand, wants to make a profit on hardware. It might be willing to sell a Mini for $300, eventually, but not at the Fire's $199 price point. 

So will the iPad Mini sell well? Probably.

Rare is the Apple product that doesn't sell well. But as Morningstar analyst Brian Colello has pointed out – hat tip to ZD Net – Apple may still suffer a loss in the long term. 

"The risk around the Mini, in our view, is that Apple's Mini pricing may concede more of the low-end tablet market to Amazon and Google, running the risk that these Android tablet users may buy compatible Android phones and/or shy away from Apple iPhones in the future," Colello opined. 

Consumers don't just buy devices, in other words. They buy into ecosystems. And if Jane Doe decides to pick up a Google Nexus 7 instead of the iPad Mini – thus saving herself more than a hundred bucks – what's to stop her from becoming an Android aficionado for good? 

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