Earlier today, Apple introduced the iPad mini with a starting price of $329. Right away, observers have pointed out that the iPad mini is $130 more than Amazon’s Kindle Fire HD and Barnes and Noble’s NOOK HD.
It’s fair to compare those devices, and even to assume they’re Apple’s target, but I don’t think that’s the whole story behind the mini’s price. Here are a few thoughts on why Apple chose that seemingly oddball price.
The Frugal Shopper
Apple isn’t competing with the Fire so much as making a more accessible iPad. At five hundred dollars, the iPad is expensive and likely out of reach for many. Now that the iPad mini is priced at $329, the frugal consumer’s choice changes from “spend a lot of money on an iPad or buy one of these less expensive tablets” to “buy a tablet.” I suspect many hold-outs will become iPad owners over the next few months.
That price seems odd. It’s the “29” that bothers me. When 9to5 Mac suggested $329, I was sure they were wrong. Why not $299, $349 or even $399?
Well, $299 is right out because that’s the cost of the entry-level iPod touch, and $399 is too close to $499, the cost of the mini’s full-sized sibling. I guessed that it would cost $349 (Apple likes beefy profit margins), but Phil Schiller surprised me today by announcing that the entry-level iPad mini costs $329. When you think about it, it’s the right price. Apple could have charged $349, but it chose $329. Because it can.
Why then would that shopper choose an iPad instead of a Fire or a NOOK? The simple answer is, “because it’s an iPad.” Is the device’s appeal, reputation and prestige worth $130? We’ll have to wait until Apple’s 2013 Q1 earnings report to find out.