New iPad is No Kindle Killer
That great sighing sound you heard coming from the Northwest on Tuesday was the collective expression of relief coming from Amazon.com’s headquarters when Apple introduced its new iPad Mini with a starting price of $329.
Any thought that Apple would go from owning the top end of the tablet market to the entire category was quickly done away with the announcement that Apple’s starting price was $130 higher than Amazon’s seven-inch Kindle Fire HD.
The iPad Mini’s higher price doesn’t mean that there is no joy in Cupertino, however.
For one thing, as an Advertising Age piece points out, the larger iPads were not nearly as on-the-go friendly as the Mini. As a result, consumers who have used the larger iPad as an at-home device may now use it in much different ways as the tablet becomes a much more mobile device.
A PCWorld article suggests the iPad Mini may also open up business opportunities for Apple. In a nutshell, the Mini delivers all of the functionality of other iPads, but at about 65 percent of the price.
Discussion Questions
Did Apple make a mistake not launching the iPad Mini at a price point closer to popular seven-inch Android tablets currently on the market? If the Mini is successful, how might a more portable iPad affect mobile marketing and m-commerce?
I love the new mini and will be purchasing one soon for exactly the reasons they want: It is more portable with all the functionality of my current iPad which I will still use at home and work. And also because I want access to the Apple universe which I am hooked to.
No, it won’t kill the lower-cost small tablet competitors. But it will give Apple lovers an extension to their collection, and it will provide an entry to the Apple computing platforms for others.
It will also likely continue to grow the mobile marketing and m-commerce usage which all retailers must pay close attention to.
Apple has never looked at price as a competitive advantage, and they certainly were not looking to change their strategy at this point. Apple looks to produce great, compelling products at a very high margin, and then encourages consumers to choose based upon quality, technology advancements, and expertise.
The smart consumer ultimately gets to decide what works best for them.
Here is a quick test. Ask 10 people between the ages of 14-24 if they’d prefer to have a Kindle Fire or an iPad Mini. The resulting answers will let you know if Apple’s strategy is correct.
It’s a tricky question: Yes, an iPad mini priced at $299 would have been a smart short-term competitive play vs. Amazon, Samsung and others. On the other hand, the $329 price point maintains Apple’s “premium quality at a price” image. Since Apple is offering the “original” iPad 2 (without retina display) for $399, the bigger question is how many units of the mid-priced model they will actually sell…and whether they will do a better job forecasting demand than they accomplished on the iPhone 5.
While I was disappointed that Apple did not more aggressively price the Mini, I expect that it will be a hit with consumers. Apple dominates the tablet market because it offers a user experience and an eco system that is second to none.
Amazon can breathe a sigh of relief, but it still has a long way to go to compete with Apple in the tablet marketplace.
Apple has been on a roll defining its market and not matching or caring what others are up to. To have tried to match price points would have given control of their product destiny to the competition. And Bezos recently commented that the Kindle was priced at/near cost — Apple would never do that unless someone like a carrier was making up the difference. I’ll also take an educated guess that Apple did their homework and saw indicators that there is a market for a “premium quality” small tablet with their logo on it, at this price point.
Apple products have always been able to command a higher price than competitive items. The mini is no time to change that, particularly with the high quality that the iPad delivers.
No question the mini will have some advantages over mobile phones in particular and many people who like the larger screen and the many apps will definitely carry the mini with them.
Apple seems to be a trend setter with their technology, and people follow. As an iPad user, I can understand the concept of a more convenient sized iPad, but I am not rushing out the door to spend the money on an iPad mini since I currently have a perfectly good iPad. The price point may be a little higher than the other similar sized tablets on the market, and consumers looking for a new tablet will have some choices to make. It will be interesting to see how the sales of these seven-inch tablets play out this upcoming Christmas season.
Yes, this expensive price point was clearly a marketing error for Apple. The mini should have been priced at no more than $299. Especially during these recessionary times, this is a big price point for Apple customers to overcome at $329. Apple has to remember that the iPad mini is no iPhone. Considering that Amazon is already ramped up, Apple will clearly have issues here. We will know for sure after the Holiday season.
Apple is a company that is built around a premium pricing model (Mac, iPhone, and iPad all occupy the premium slot in their category). It’s helped make them the most valuable company in the world. Once you concede such a position it can be hard to ever get it back. Initial reviews on the iPad mini indicate that it’s superior in many ways to the Android competition. There’s really no reason here for Apple to compete on price.
For Apple, the device is only one piece of a fully integrated content distribution channel. I have a Kindle Fire. I appreciate the Amazon store and I even use the Prime feature to get much content free, but Apple is still far ahead on apps and content. The Apple distribution channel seems to be the most ubiquitous and user friendly.
The two worlds that seem to be evolving are the easy to use, but restricted, Apple environment or the more open but unpredictable Android environment. I think content and apps will drive consumer decisions more than hardware.
The iPad Mini is really a niche product for Apple diehards. While the iPad was a category maker, the mini is a me-too product trying to compete with Kindle and Android. Think of it as any other private-label product.
I know people who have drawers full of Apple devices. Apparently the price point isn’t an issue. And I suspect that people like me, who haven’t purchased an iPad, would not be more likely to even if the Mini were priced at $200. Good move on Apple’s part.
Better product = higher price point. I think it was a smart move for Apple to not get into commodity pricing on mini. While I won’t give up my full size iPad for a mini, I think others might select the mini as their tablet of choice given portability.
I believe that Apple has made a mistake in understanding the role of the 7 inch tablet. As opposed to the larger versions, the 7 inch has potential to significantly impact retail sales by encouraging showrooming. The goal should be to maximize penetration of these min tablets, even among customers who own the larger version for home use.
Amazon, by selling their tablet at breakeven, has decided strategically that building a pipeline to customers is more important than short-term revenue. Apple is relying on their substantial brand equity to permit them to make margin on the tablet while also making money on the pipeline.
Difficult to have both, but Apple is an immensely strong brand. We will have to wait to see what happens.
I think Apple has done a nice job pricing this product to the market. It should be more expensive than a Kindle. It does more, and does it better.
And it is “less” than a traditional iPad at $500. To my senses, is this is a very smart strategy, and that time will validate Apple’s choice.
And this is a developing market. We must not become stuck too soon in rigid structuring of the tablet market. There remains room for a wide range of options.
My two kids will get a Google Nexus 7 for Christmas and an account with GooglePlay each. I might get a new Apple iPad for myself. But it should have been cheaper. Apple has entree level iPods and used to have affordable Macs too. I guess they can’t keep up with demand.
Apple made the right pricing decision for its business model, heavy on hardware margins. Amazon made the right pricing decision for its business model heavy on growing installed base.
Here’s what’s been called the Amazon Doctrine: make money when people use Amazon devices, not when they buy Amazon devices.
It’s a clear difference from Apple, and one that Amazon believes is better for consumers. Note the use of the word “consumer” as in content, rather than “buyer” as in device.
I trust Apple on this one. It’s hard for me to see this one making it in a crowded tech market, but betting against them doesn’t seem smart.