Genius Marketing
The price point for the Mini is perfect. Apple does not intend to sell a product for less than its competition, ever. The best you can hope for is dead even, which the Mini is compared to the 4GB Rio.
Like it or not, Apple is a BRAND and you are paying for the name and all it stands for. What is the technical difference between Coke and your grociery store's proprietary equivalent? Both are fizzy sugar water in an aluminum casing, but most will pay 2-3x more for a brand they trust.
The price difference between the Mini and the 15GB iPod only really matters to Mac people (4% of the computing world, remember). This product was designed to target a specific market at a specific price point. In a Best Buy the Mini might be near the Rio, begging the comparison betweent the two. The interface and wealth of other features should win the day for Apple in such a face-off.
This product is intended to take money out of competitor's pockets, not out of Apple's own in the form of those who were already considering the entry-level iPod. In fact, by upping the drive space and holding the price, Apple has specifically prevented the lower model cannibalization a $199 Mini would have caused. The fact that so many here are whining about the price and can't possibly imagine buying one over the 15GB iPod proves that they were right on with their pricing.
All those who think the Mini will die are probably the same people who thought the $499 price point for the high end iPod an outrageous price for an MP3 player. Yeah, right. Three of the top five models in mp3player sales in 2003 were iPods, including the 40GB. Sure glad Apple didn't whore those out--the R&D budget can stay flush and innovation can continue.
People wanting Apple to play the razor-thin margin commodity computer market don't understand that Apple's way of sidetracking that cutthroat market ensures quality, innovation, and longevity. We will always pay as much or slightly more for an Apple product--because as a group we understand that user-friendliness, stability, build quality, and aesthetic beauty are all nice things to have in a computer. If we didn't feel this way we'd all be cobbling X86 motherboards into hotrodded yet wildly unstable, high maintenance systems for less money. Count me out on that. My time in this life is worth something, and I don't want to waste a single minute trying to hack through some config conflict with my buggy OS.