Apple Considering Lower-Priced iPad Mini at $199-$249?

[Gasu E.]

Not much, considering that Apple eats up all the cost for providing all the free apps, handles all the advertising for free, payment processing for free, sells gift cards below face value (because no store would sell $50 gift cards if they just had to pass on the $50 to Apple). Apple makes money by selling hardware. The App Store is basically advertisement to entice you to buy the hardware.

Seriously? Let me respond point-by-point.

- Apple charges $99 for an app developer license.
- Advertising is a fixed cost that gets amortized over their huge revenue stream (which they breakout in their 10-K)
- Apple takes 30% off the top for apps. That more than covers the store's cut on the gift cards.

Apple is now doing a couple of billion dollars revenue per quarter in the App store, so the profits may be closing in on $1 billion on an annual basis.

 

[the8thark]

Apple Considering Lower-Priced iPad Mini at $199-$249?

I would say no. Because that's the same price points as the iPod touch. And Apple really does not have two competing products at the same price points.

 

[ndirishfan1975]

The iPad mini should have never been produced just like Steve Jobs said. Their are cheap products made by other suppliers for those who like cheap products. Apple should never bring cheap products to the market.

The iPad Mini was introduced about a year after Steve died. Do you really think he had nothing to do with it? I doubt very much that the iPad mini went form idea to mass production in less than a year.

 

[AppleScruff1]

it already is the best selling ipad

Meaning that whatever version is the cheapest will be the best selling. I'd venture to guess that if they had an iPad for $199, it would be the best seller.

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Isn't it already Apple's best selling iPad?

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Low priced mini is going to happen. But only once a Retina Mini is available to sell at the current price. No need to lower price on an item that is dominating the market and flying off the shelves. And if Kou thinks the tablet market is only growing 10% or so, they are incredibly foolish.

The new normal for tablets is going to be one at work, one at home and a smaller one for intra-day travel. Price will probably have to come down to make that happen, but it will take incredible increases in sales to get to this point, so demand is going to be huge for the next decade or so. This is where everyone wants to be, because tablets are great, though people may not have this figured out yet. And the tablet you want at home and work is a full-sized one that shows a full sheet of paper on it.

See above.

 

[AppleInLVX]

Really the main reason why people buy minis .

Oh wait it's cause it's smaller and lighter and you can't even tell it doesn't have a retina lol

Smaller and lighter I'll agree with. Can't tell it's not retina? I don't know what screens you're looking at, but I know I can tell, and it's the singular reason I don't own one yet.

 

[AppleScruff1]

Agreed! That has long been the barrier for those wanting to enter the Apple/Mac world that haven't already done so. For some, it's never been an issue with quality or features, just price.

And at a low enough price point they will attract a group of customers that they have never had. The ~$200 range just might do it.

 

[iGrip]

Do you think those phones have been developed because an engineer at Samsung wanted to use a device like that?

I think that those phones were developed for exactly the same reason the products at Apple are developed:

After determiing that they are the best way to maximize total profits, the suits tell the engineers to develop them.

 

[PracticalMac]

The Nexus 7 is proof that people want to save money even if it means sacrificing features.

Success of the first Kindle Fire is more proof. As hardware went it was junk, and the OS was just a front place for Amazon, but it sold in the millions. Sure it had close to a 30% return rate, but it still sold millions.

Remember the iPhone dropped in price pretty quickly after it was released. iPad has had a really long run at its well priced point, but it is not sustainable.

iPad sales were up 65% YoY in the 1st quarter, so price apparently isn't an issue.

Source?

I suspect it was based only on comparison to iPad sales the previous year. Since then you have iPad 2 (and for brief time iPad 2) at $100 less, and now the mini, which costs $70 then full size iPad 2 with better cameras.

With all those price drop and sales, Apple should have done a 100% YoY compared to last year. This is a strong indication the current iPad price model is no longer sustainable.

 

[petey2133]

Apple's stock price has tumbled because margins are getting squeezed by products like the mini. So please tell us how Apple diluting profit even further does anything for the company except pressure earnings further?

Also, isn't it silly to suggest Apple doesn't have "appropriately" priced tablets when they sell tens of millions every quarter? When a product is over priced it just plain flops.

It's true, some people can't or don't want to afford iPads. But the same can be said of any luxury product, no?

Technology is getting cheaper. They priced the mini way to high to start with. Now they are looking for cheaper iphones and ipads (the meat and potatoes of their lineup) Because if you look at things like the galaxy 7 tab for $150-$180 it does just fine for half the price. I own many apple products, but the phones are horribly boring 6 years later and the ipad was cool when it first launched, now the impression has dropped. The worst depreciating asset you can own is a car. Just because land rovers look nice dosent mean its the right buy.. Over priced to begin with, similar to apples strategy. Samsung is rising, apple is falling if if just by the smallest of margins as you claim.

 

[69650]

But this isn't cannablization. It is an iPad mini eating an iPad mini. All that has happened here is Apple goes from getting 25-30% to something around 2-10%. They have just gave up money not market share.

They have also either killed off the iPod Touch ( most sales pumment as it is now priced higher than an iPad. Higher price for 3.9" smaller screen. ) Or equally had to gut the Touch's margins. Again for what?

It is important that Apple not get caught up in the crackhead delusion that iPad and iPhone sales growth will aways be in the very high double digits. Over time all products' growth tapers off. They could chase growth by nuking margins but in the long term that is a failure strategy. Eventually even if just give away the product they'll hit a plateau.

There just are gong to be some folks who can't afford an iPad mini. That is a reality. Trying to sell everything to everybody is a loosing strategy.

You're suggesting that Apple should cede the entry level tablet market to Google and Amazon simply to maintain their margins. What happens in a few years time when those people want to trade up to a bigger or better device? They are now wedded to the Google or Amazon ecosystem. There not going to buy an iPad and replace all their apps, books, music, etc are they.

Apple have always used entry level versions of their products as a way of getting users hooked on the Apple ecosystem. It's why we still have the iPod shuffle or the entry level iPod touch or the iMac mini, or the 11" MBA. Once inside Apple's walled garden hopefully they will buy more Apple products.

I'm not suggesting Apple should suddenly start competing at the bottom end of the market but ceding the 7" tablet market to Google and Amazon is a dangerous game to play in a post-PC tablet driven world.

 

[mantan]

Apple's stock price has tumbled because margins are getting squeezed by products like the mini. So please tell us how Apple diluting profit even further does anything for the company except pressure earnings further?

Also, isn't it silly to suggest Apple doesn't have "appropriately" priced tablets when they sell tens of millions every quarter? When a product is over priced it just plain flops.

It's true, some people can't or don't want to afford iPads. But the same can be said of any luxury product, no?

This is the biggest 'problem' Apple faces right now. The low margin items are canibalizing the higher end stuff.

People were perfectly happy with the non-Retina display and are snapping up Mini's instead of iPad 4's. (heck the iPad2 still tells a ton).

This shows the tablet market may be maturing faster than expected. Once you have a thin/light Retina iPad 5, what MUST have is left in the market? People aren't going to automatically upgrade ever 2 years like a phone, so you have to 'grow the pie' with new users.

You are already seeing this on the iPhone front. Advances are incremental and it's no longer the 'must have'. Sales are propped up by low cost items like the free on contract 8GB phone and upcoming low cost iPhone model

Add to the mix, the tablet market undercuts the laptop market. (another high margin item).

Apple's stock price rode the wave of three innovative products that created it's own market (iPod, iPhone, iPad)....it desperately needs to find that next 'frontier' to put in a high margin 'must have' item.

TV seems like a long shot at best, for all the reasons listed in multiple threads. A watch seems like an even longer shot. This is where the loss of Steve Jobs hurts Apple the most. I'm not sure Tim Cook can convince the new product is as 'magical' as the great things Apple has made in the past.

 

[mdelvecchio]

I think this is a mistake. They do have the possibility to get the 'cheap' buyers, only concerned with price, but they risk abandoning their core product line especially if they all do the same functions the same way. I mean, who would want to buy a Ferrari for $200,000 when there is a 'less expensive' Ferrari that does the same thing, the same way, with the same features for $50,000?

I think what Apple needs to do is slow down the rate of product introduction, not dramatically INCREASE their product line. It sounds and smells like they are recreating the conditions that almost killed them earlier in their history... This I see as a BIG mistake... HUGE...

1) youre responding to a rumor.

2) wheres your $150 B in the bank? apple knows what its doing.

 

[Brittany246]

That's definitely not going to happen. Want a cheaper iPad Mini? Wait until the 2nd gen come out and then buy the 1st gen.

 

[OrangeSVTguy]

If the iPad mini drops to $199, what happens to the iPad micro(iPod touch)? $99?

 

[HarryKNN21]

The iTunes store is run at around break-even. It is there for the benefit of the devs and the customers. Apple does it for altruistic reasons.

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Apple is nothing like Rolls Royce. Apple is like Ferrari.

That's the same comparison, would we possibly see Ferrari re-badge FT-86 as a budget Ferrari for every man? No, they won't.

Also if we look into Android eco-system, every Android phone maker is competing with each other with native functions in their own Android UI. Thus the competition between Apple eco-system and Android eco-system is almost impossible, how could iOS combine all those Android UI into one?

That's like if Ferrari is not going to re-badge FT-86 to sell, is Ferrari still competing with Toyota? The answer is obviously NO! This also says why Android people won't go for iOS, vice versa.

 

[PinkyMacGodess]

1) youre responding to a rumor.

2) wheres your $150 B in the bank? apple knows what its doing.

And you are responding to a comment on a rumor.

If Apple really wanted to, they could kill the company in less than a year. They are not 'too big to fail'. Already the iPad Mini has cannibalized sales from the larger iPad. Sure, they are getting the sale anyway when someone buys the Mini, but the margin isn't likely as big on the Mini, I don't know. PLUS that means 'x' number of larger iPads that are going to be sitting in inventory dripping cash. (Besides, isn't the Mini just a cheaper iPad? And soon they will drop 9 more models on the market with the rumored retina Mini))

 

[SILen(e]

The Nexus 7 is proof that people want to save money even if it means sacrificing features.

Nexus 7 sales: about 7 million.
After three quarters, with it being with a very low margin, being the flaggship Android tablet of last year.

iPad Mini: most likely more than 7 million.
After a bit more than one quarter.

While that could prove that people buy the iPad Mini instead of the iPad 4, because it's cheaper - it also proves the opposite - people buy the iPad Mini instead of the Nexus 7, even though it's more expensive.
Even though some people claim that the Nexus 7 has more features/better specs.


And nobody knows how many Kindle (Fire (HD)) Amazon has sold, because they never report numbers.

@petey2133

GalaxyTabs "sell" because Samsung is giving them away for free when you buy one of their TVs.
Or one of their cameras...
Or...

I bet they will give you a free GalaxyTab when you buy a Galaxy S in the future.
And if you buy a GalaxyTab - you'll get TWO additional GalaxyTabs for free, because Samsung wants to celebrate the day on which someone finally bought one of those things.

 

[bflowers]

At $200, I would consider a mini. At least in the current iteration. I'm not interested in $330 for the current generation's speed, capacity and graphics. Might as well go with a refurbished full sized ipad for $400. Oh wait, I did that. Still, for $200, it becomes a viable consideration for in car kid distraction. Much cheaper than the $2000+ built in DVD systems.

 

[JaySoul]

I have never once used the rear camera on my iPad, not once.

Drop the rear camera, keep the front one for FaceTime. Keep the current screen, make it cheap, watch it sell.

I'd buy one if it really did go that low in price, definitely.

 

[iSunrise]

Update the internals of the current mini with the optimized A5 core and make it cheaper, while you introduce a retina mini. Mission accomplished. The current mini is way overpriced anyway if you compare it to the iPad.

I have never once used the rear camera on my iPad, not once.

Drop the rear camera, keep the front one for FaceTime. Keep the current screen, make it cheap, watch it sell.

I'd buy one if it really did go that low in price, definitely.

Dropping the rear camera would be pretty dumb, since you would lose a lot of functionality. Not going to happen. A 5MP pixel camera is not something that drives up costs nowadays.

Don´t judge or design products on what you need. Think about what other people need and are accustomed to and design a product around that, not the other way around.

 

[bflowers]

If the iPad mini drops to $199, what happens to the iPad micro(iPod touch)? $99?

Doubt it, leave it at $199 with larger capacity storage than the mini. They fill different needs. The iPod is for people without a smart phone, the mini is a small tablet. Try strapping that to your arm when you go jogging.

 

[BC2009]

A plastic iPad mini after they already introduced an aluminum one? Um, no, not happening.

You're probably right about that, but poly-carbonate seemed like the only vaguely believable thing. I can't see Apple crippling the device functionality. But so far there has never been an iPad that was not aluminum so even that does seem unlikely.

Overall, I think the existing iPad mini will see its price drop as production costs come down and Apple will introduce an "iPad mini with Retina Display" at $329 and move the updated "iPad w/o Retina Display" to the $229 price point.

 

[currentinterest]

I could see Apple updating the A5 core and dropping the rear camera from the current mini and selling it for $229. If 8GB, perhaps $199, with a 16GB model at $249. This will only occur once the retina, $329 mini is announced. I could also see them announced at the same time, with near immediate availability of the standard display mini, and a slower roll out of the retina mini.

As for the iWatch, if it is introduced, it will not be a $99 product. The price point will be more like $399 or higher. And they will sell in the millions.

 

[PracticalMac]

Nexus 7 sales: about 7 million.
After three quarters, with it being with a very low margin, being the flaggship Android tablet of last year.

iPad Mini: most likely more than 7 million.
After a bit more than one quarter.

While that could prove that people buy the iPad Mini instead of the iPad 4, because it's cheaper - it also proves the opposite - people buy the iPad Mini instead of the Nexus 7, even though it's more expensive.
Even though some people claim that the Nexus 7 has more features/better specs.

And nobody knows how many Kindle (Fire (HD)) Amazon has sold, because they never report numbers.

iPad has a market dominance and great reputation, you cant ignore that huge factor in why the mini sales (which could be around 15 million so far).

Except for a higher resolution screen, the Nexus is clearly a lower performing device vs iPad mini, lacks the back camera, etc, so why did some 7 million people buy it?

Then, if you compare all the 7" and 8" class tablets, the mini is a minority, likely <20%.


As to Fire, certain parts are unique, like the screen. Produces can be encouraged to reveal production numbers.

 

[Navdakilla]

8gb? I guess that'll work for someone kids or people that stream everything, but I'm basically a minimum 32gb now