Everyone knew Apple's (NAS: AAPL) iPad Mini was coming. The problem was going to be the pricing. As I wrote earlier this month:

There is no right price for the iPad Mini, and it will be Apple that pays the price for that unanswerable dilemma. If the iPad Mini is too cheap, the iPad suffers. If the iPad Mini is too expensive, no one will buy it. Skimping on features will make it dead on arrival. Loading too many of the features of its larger sibling will destroy the sibling's appeal.

That's pretty much where we are now with today's big reveal. At $329, it's too expensive to compete against the $199 devices that it was supposed to combat, yet it's also dangerously close to eating into what is probably the more profitable full-sized iPad on a unit basis.

For those scoring at home, let's take a look at the three cheapest models in the iPad Mini, iPad 2, and the new fourth-generation iPad lines. We're talking about $329, $399, and $499 price points, respectively, for the entry-level 16 gigabyte models.


The iPad Mini isn't simply the 9.7-inch iPad in a smaller 7.9-inch package. It lacks the crisp Retina Display graphics of the new iPad. It lacks the more powerful A6X chip. In terms of resolution and processing power, it's essentially the iPad 2 after shrinking in the wash. The dual-facing cameras are the higher quality ones found in the new iPad, but is that really enough of a difference-maker to someone choosing between $329 iPad Mini and the $399 iPad 2?

Now let's look at the Amazon.com's (NAS: AMZN) Kindle Fire HD and Google's (NAS: GOOG) Nexus 7.

There's a big difference between 7 inches and the iPad Mini at 7.9 inches diagonally. Apple's device covers 29.6 square inches of screen space, compared with just 21.9 square inches of real estate for the 7-inchers.

However, will that be enough to sway shoppers away from the $199 price point of the Kindle Fire HD or the Nexus 7? Probably not. The iPad Mini is going be a big seller, but it's going to come largely at the expense of Apple's pricier iPads.

By holding back on the specs so that the iPad Mini doesn't destroy the fourth-generation iPad this also opens the door for entry-level players to win the spec-sheet battle, too.

We'll find out in three months how this all plays out. Unlike way too many gadget makers, Apple is transparent enough to put out actual unit metrics on a quarterly basis.

Apple did one thing right, though. In updating its full-sized iPad now -- instead of the historical springtime refreshes -- it will create a more robust than usual demand for the company's tablets during the holiday quarter. In other words, it will seem -- on the surface, at least -- that Apple did the right thing by introducing the iPad Mini at its tricky price point.

We'll know better.

Mobile madness
The popularity of e-readers, smartphones, and tablets opens the door for some surprising Wall Street beneficiaries. Read up on three hidden winners in a free report. You don't want to be late to the party, so click here to check it out right now.

The introduction of the iPhone 5 was an event Apple investors had been looking forward to for months. The stakes were (and continue to be) high and the opportunity huge, so to help investors understand this epic Apple event, we've just released an exclusive update dedicated to the iPhone 5 launch. By picking up a copy of our premium research report on Apple, you'll learn everything you need to know about the launch and receive ongoing guidance as key news hits. Claim your copy today by clicking here now.

The article $329, Apple? Really? originally appeared on Fool.com.

Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, and Google. Motley Fool newsletter services recommend Apple, Amazon.com, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.


Increase your money and finance knowledge from home

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

Investing in Real Estate

Learn the basics of investing in real estate.

View Course »

Add a Comment

*0 / 3000 Character Maximum