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Apple struts iPad Mini, goes premium with $329 price

Gregg Keizer | Oct. 24, 2012
Apple today unveiled the iPad Mini, a smaller tablet starting at $329 that features a 7.9-in. 1024-x-768-pixel display and can run all existing iPad software without modification.

Carolina Milanesi of Gartner didn't disagree, but had a slightly different take.

"When Apple created the tablet market, it came in at specifications and pricing that other vendors could not reach, so [those rivals] had to go down in size to 7 inches and go down in price," said Milanesi. "Now, Apple is coming in in that similar form factor [of around 7 inches], but they're the premium offering in that segment. It shows that they're not going to come down in price for more market share. They believe they can still command a premium."

Milanesi argued that in the short run, at least, the $30 difference between the predicted $299 and the actual entry price of $329 "doesn't matter" to consumers.

"If the fact is that for that $30 I get a richer experience and access to all the dedicated apps, I think consumers are discriminating enough to see that difference," Milanesi said. And Apple, starting at a higher price, can always lower it, something much more difficult to do for vendors at the low end that try to raise prices.

"They're going out to get those people who are willing to pay the money," Milanesi said. "When, in six months or whenever, the second generation comes in, then they can cut the price of [this] tablet."

Gartner has estimated that Apple will sell approximately 8 million iPad Mini tablets before the end of the year.

The iPad Mini will ship Nov. 2, starting with the Wi-Fi model, in 34 markets, including the U.S., Canada, France, Germany, Spain and the U.K. The cellular-equipped iPad Mini will ship about two weeks after that, Schiller said.

Apple will begin to take pre-orders for the iPad Mini on Friday, Oct. 26, coincidentally -- or not -- also the launch date for Microsoft's Windows 8 and its first-ever in-house tablet, the Surface RT.

"Apple will sell truckloads of the iPad Mini this holiday season," said Patrick Moorhead, principal analyst at Moor Insights & Strategy, earlier today.

In a later interview, he expanded on that.

"The reason why I think they will still sell so many, even at the higher price of $329, is the allure of having a tablet in that $299 range brings in a completely different class of buyers, people who always wanted an iPad, but didn't want to spend $499 or $599," Moorhead said.

But he wasn't completely happy with the $329. "The natural price point is $299, and it will be $299 over time, but the difference between $299 and $329 lets them cut the price at some point," Moorhead said. "That's why I think what they are doing here is testing the [pricing] waters. But it's going to be a measurement stick of how much money Apple can garner."

 

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