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iPad Mini between iPod Touch and iPad Wi-Fi Testing bed for iPhone mini ?

October 26th, 2012

iPad Mini at $329 target a different usage model, one that prioritizes portability over content creation. iPad Mini address more price sensitive users – those yet to be convinced of the merits of a 10″ tablet but whom Apple think is important to capture now, in order to lock them into Apple’s ecosystem long-term. It also reduces the price advantage enjoyed by 7” tablets from Amazon and Google. In our opinion, Apple can likely re-engineer the iPad for a lower cost, a strategy based on relative pricing seem to us to run the risk of proving margin deflating.

At $329 Apple is be pricing the iPad ‘mini’ at a 65% premium to rival products from Google and Amazon ($250 and $199 respectively for 16GB versions). Digitimes even reports that Google is planning a $99 tablet announcement before the end of this month. Here is a Detailed Comparison of iPad Mini Vs Kinle Fire HD Vs Google Nexus 7 vs Samsung Galaxy Tablets

Amazon and Google eat into Apple’s tablet dominance through the sale of tablets at 0% gross margins. The clash between Apple’s strategy of using services to sell hardware vs Amazon and Google’s strategy of using hardware to sell services thus looks likely to run for some time yet. That said, Tim Cook will monitor monitor Amazon and Google’s traction for the next few quarters before deciding to compress iPad margins.

Similarly, the much talked about iPhone mini for Developing nations would likely have to be much cheaper than the current iPhone to meaningfully impact price elasticity in unsubsidized markets yet the drop in functionality could prove relatively limited.

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