Phil Schiller Defends iPad Mini Pricing Decision

[topless stang]

Let me put my spin on it...

I was all set to pick up two of these as Xmas gifts for my folks who have yet to jump into the tablet game. Since we live several states apart sharing photo streams and facetime were the main reasons I was prepared to spend a little more on the mini vs various android tablets. That was until they unveiled its final specs and confirmed a lack of retina display....then came the final slap in the face...the $329 price tag. I love their products, but that price is WAY off for what u get....so consider this...RIGHT NOW ON THEIR SITE....you can spend an extra $50 and get the iPad 3rd gen for $379!! That really makes the mini look like a poor choice.

With this info I would like to see anyone on here tell me that the price on the mini is fair....

 

[charlituna]

You can get close to the price they pay by looking at their financial statements (public information). Just that you get an aggregate number but you can still work it off with some effort.

You can potentially achieve a 'best guess' but that is not fact and the guess could be way off.

 

[pezj]

$329 for a handheld computer with a screen seems like a bargain. Just a few years ago the cheapest Apple product to compare was a $1000 white plastic laptop. I'm all for this new product!

 

[rendevouspoo]

Oh, do we know for sure how much RAM is in the iPad mini? Or are you just guessing?

I would weigh what you don't know against what I don't know and I have a feeling you'd come out on top...just saying. But hey, keep up the hateraide!

No, I don't think you know the fundamental meaning behind what RAM is.

 

[you people smh]

Folks that say that tend to not have a realistic view of the costs of things. They forget costs like R&D, licensing fees, labor costs, running those pretty Apple Stores where they camp out to get their new stuff. Yes Apple makes a lot of money but it's not as much as you think.

"

Come on now,

They're the third most profitable company in the entire world, behind exxon and chevron.

how can you say they don't make as much as you would think?

 

[MyopicPaideia]

I didn't even read the whole thread, I am just going to write my spontaneous thoughts, so I apologise if this has already been discussed to death.

The iPod Touch (The REAL iPad mini) is already priced at $299, and NOBODY has been bitching about that price.

The iPad mini, starting at $329 is only $30 more, and has EVERYTHING the iPad 4th Gen has except the retina and the A6X. It has the cameras, the wifi and connectivity, Siri, etc. The A5 will power this thing exactly the same as the iPad 2. The display is said to be superior, having not only a higher PPI count, but also using the updated display technology not present in the iPad 2.

It is pretty much superior to the iPad 2 in every way. Except it is a bit smaller.

This tablet does not compare to the Kindle Fire, it is not even in the same category, it is an iPad.

That said, I agree with those who said the next generation mini will probably blow it out of the water...BUT...I am still really tempted to sell my 3rd Gen iPad to get a 64GB mini...

It would complete my goal of having the smallest available products in each line

The pricing for this thing is not bad at all for what you get. It seems people forget that Apple doesn't have to compete in price wars. They never have, not with their laptops, desktops, phones, music players, or tablets. Why would they start now?

This may be a cheap shot in many people's minds, but If you want a chumped up android phone made of plastic, with inferior and unintegrated internals, and a limited application selection - if you buy into the myth that a tablet is only media consumption and has no real productivity value - then yes, the Fire or another 7" tablet is for you. If you want a real machine that can be used to not only consume media but also get things done, at 8" with almost 40% more screen space than any 7" tablet out there, with the full arsenal of iOS apps out there...(insert endless list of superlatives here) then the iPad mini is an absolute steal starting at $329.

 

[charlituna]

If it comes in 326ppi sure why not.

Retina doesn't always equal 326ppi.

According to the math that Apple released and stated is their definition of the term, given the distance from the eye to the dung during typical user and assuming average 20/20 vision quality for the user, the actual ppi for that dung to be Retina is in fact only about 50ppi. And they are selling 100ppi dung so it's actually Super Retina. AND it comes with Apple's new innovation 'smell' technology which makes the dung smell like roses and vanilla rather than the typical 'dung' smell of other companies lower quality dung piles.

 

[the8thark]

It's a simple equation.

Price too low and you enter the iPod Touch price points.
Price too high and you enter the iPad proper price points.

So the only reasonable price point for the Mini was inbetween. And Apple chose this.

 

[charlituna]

Has Apple ever changed the price of a new product?

Other than End of Life pricing, only once in recent history. And that was the original iPhone. Folks were peeved about having to pay full price for the phone AND be on a two year contract when the SOP on cell phones was that the carrier paid part of the costs in exchange for the contract, the ETF etc. ATT was basically double dipping wanting to charge an ETF with no money invested in the device to recover. Not cool so the price was refigured and lowered. Those that bought the phone prior to that point were given a partial refund

But in the terms of dropping the price because sales aren't as good, nope, Apple doesn't pull that move.

 

[saturn88]

Nope. 32GB are rolling out for the price.



This is something that boggles my mind.
1) Plastic. So what? The back is a rubber-like material that prevents slippage. No scratches either. The aluminum is nice, but with a week it looks like hell unless you put an obnoxious case on. To each his own though.
3) Android junk. It's extremely laughable to claim JB is junk. JB and Google Now, as of right now, is better than iOS and Siri. Will it stay that way? Probably not, but thank goodness that there is someone out their forcing their hand or else it wouldn't hapen.

1) Right, embedded rubber back: finally they got smart. iPhone owners still have to put a condom over that aluminum, so what's the point?
3) iOS is dated and inferior, always playing ketchup on Android features. Android has always been 2-3 years ahead, e.g. copy/paste, multitasking, wireless sync, voice command, folders, widgets, LTE...

 

[gto55]

If you compare pure specs, Apple is always going to be more expensive. You must take things like build quality, customer service, reliability, etc into consideration when you consider the pricing. If you only look at specs, phones like S3, Note 2 etc are rip offs as well because you can fine Chinese knockoffs at Michel cheaper prices and more features.

Apple proved they can be way ahead the current competition when they were the first to purpose a Retina display, the power of the A6 processors, or the just announced Fusion drive mode for the new iMac or Mac Mini

 

[jdiamond]

Have ANY of your guys looked at the BOM analysis?

I had totally hoped for a $299 iPad Mini, as it fit so well in their price increments. Then I saw the BOM for iPads. The iPad Mini is not necessarily cheaper to make than the iPad2 - it could be more expensive. In any case, the BOM (raw cost of parts) was estimated around $250, while the base iPad3 was at $320. The highest end iPad had a BOM of $420. Apple targets as high a profit as possible, and they've been averaging between 40 and 45% recently. This is an important number to investors - the only one given every quarter, and usually mentioned right after total sales for the year.

My assumption was that they would end up selling the iPad Mini at $399 and dropping the iPad2 from the lineup. After all, both are roughly the same cost to make, and I still bet the iPad Mini costs more. But Apple showed their commitment to low prices by actually trying. They could have pulled the Touch trick and offered the iPad Mini at $399 with 32GB, so it looks like it's actually $100 cheaper than the iPad2. But at $329, they are pushing down their profit range to just 26% !!! That will definitely effect them and hurt the stock rates.

So if everyone is right about needing it to cost $299, then the only mistake I see Apple making is using higher quality parts that cost more when it doesn't matter so much to people. Obviously, a plastic iPad might have gotten them closer to $299.

EDIT: BTW, I do understand where people are coming from. I was totally let down when the 5th generation iPod Touch cost $300 instead of $200. But you guys have to at least look at what it costs to make these things before passing judgement. And after a few months of pain, I'm just saving up to pay $300 for the Touch...

 

[class77]

I am not sure the extra $30 would make a huge difference and I think the Mimi's margin is already in the lower end. At $299, would it be more attractive, sure. But you would still have the same people who would say that the Nexus is still cheaper and a better deal. The consensus before the event was that it would be in the $299 - $349 price point and so I think the price is quite reasonable.

The $30 difference is not really a monetary barrier, it's a psychological barrier. If you have the scratch to pay $299, you can probably find the $329, BUT it's easier to justify the fact that you're getting a great deal at a sub $300 price.

 

[pandamonia]

So what he is saying is that because people currently pay what ever Apple asks they are banking on the sheeple continuing their current behaviour.

Prices have come down significantly for parts and that has been passed on to Apple shareholders and not its customers.

 

[Apple Knowledge Navigator]

What a lot of people are forgetting (with regards to the pricing) is that

1. they (Apple) need to hold back on features for upgraded models, which inevitably through their tiresome marketing, make it seem like they achived great feats
2. if they priced it any lower, this would effect the brand new iPod Touch sales
3. if they decide to sell both a 'new' iPad Mini and the previous generation side-by-side (as with the existing iPad), then they still have reasonable room to sell the old iPad mini at a lower price and make it seem better value.

I think on the whole though, if I was to criticise the iPad mini in any respect, it's more or less how you try and validate its existence. The fact remains that Amazon and similar companies got the right idea - they build a device that was dedicated to its single cause, meaning that it could not only be cheaper, but simpler to use and easier to market. For those reasons, the Kindle and alike are rightly in a pole position

Apple can't offer this service, because their mobile platforms are locked into iOS and its broader user experience. This to me is just one reason why the iPad mini won't catch on as a popular eReader, because it's not focused on that sole platform. I don't care how Schiller tries to dress up the company's efforts, the product really is a smaller iPad.

And as such, it lacks some important features that have made devices like the Kindle so popular... Dedicated buttons for page turning... a screen suitable for reading in bright sunlight... an almost instant, no brainer set-up... better battery life... and, of course, a price that justifies the actual hardware cost.

So I think the conclusion is that, although the iPad mini will invariably sell well, it won't be for its eReading capabilities (a feature that is obvious given the size of the device). I would hazard a guess that most people who want the full functionality of the iPad iOS would be more tempted to part money with original iPad and at least get a larger screen experience.

 

[kdarling]

Given the usage of these tablets a weak support network is a potentially big issue. And yes it might be big enough for some that paying an extra $100 or even $200 for something with a better support system is worth it. Especially if you are looking at schools or businesses. If Junior's 'texts' are all on his tablet and it gets dropped and breaks and doesn't function, "I have ship it to texas and wait for a replacement so I can't do my homework for the next week" isn't really going to cut it. Especially compared to Mom driving him down to the Apple Store 30 minutes away and buying a replacement for $50 cause Mom was smart and got Apple Care on the dang thing.

$330 - iPad Mini
$100 - Applecare for iPad (?)
$ 50  - replacement charge
=====
$480  TOTAL for original and replacement iPad

$200 - Nexus
$200 - replacement Nexus
=====
$400  TOTAL for original and replacement Nexus

Don't underestimate the importance of post purchase support. That's a major issue for many.

It's true that if Junior broke TWO tablets, the Apple would come out cheaper above

As for convenience, most people don't live near an Apple Store, but do have a nearby Sears, Staples, Gamestop, Best Buy or other place to buy a Nexus replacement.

Just playing devil's advocate. Not everything is black and white.

 

[435713]

I am just more amazed Phil works without Steve around. I could have swore he was a puppet. Strange world we live in, maybe he is a robot?

Apple's being wimpy they know they could have axed the ipad 2 and put the mini at 399. What are thinking over there?? Shareholders got mouths to feed!!

 

[george-brooks]

Everyone wishes that every apple product was less expensive. The fact is, the iPad mini has far better build quality and components than $199 tablets. People will pay extra for the logo. I wish it was $299 too, but $329 won't stop me from buying it.

Although I must say, Phil Schiller is really terrible at damage control. His justification for the pricing is basically "its an iPad so people will pay more for it and its still the cheapest product we have." He could've at least explained WHY its $329 instead of cheaper.

Look, making a product smaller doesn't necessarily make it that much cheaper to manufacture. This is an iPad through and through. It has better specs in almost every area compared to the iPad 2 AND its $70 cheaper. Why complain?

Imagine the price had Apple decided to include a Retina display!!

 

[k995]

Nexus has a Pentile display. These displays use 2 sub pixels per pixel, or four sub pixels for two pixels, while iPad, iPod, and every computer monitor, laptop display, and TV in existence use 3 sub pixels per pixel. That is one third fewer sub pixels. Which goes a long way to explaining why the display isn't anywhere near as good as you would expect from the resolution.

Nexus has pentile, nexus 7 hasnt . It had a much sharper display then the ipad 2 and mini

 

[IJ Reilly]

Just look at yesterdays charts for AAPL and ^IXIS (NASDAQ). There is no correlation whatsoever. AAPL bombed after product announcement.

And the patent ruling that invalidated the patent that formed the cornerstone of Apple's court victory over Samsung. Don't forget about that.

In any case, trying to correlate daily stock movements to any kind of reality is a generally a total waste of effort. Analysts (professional and amateur) always like to sound like they know why things happen, but as a rule they are just making up convenient reasons after the fact.

 

[charlituna]

So we can all agree the is cost less to build an iPad Mini than an iPad2?

No 'we' can not. Because we don't have the numbers to back that up. So any agreement is based on potentially way off based pulled out of a lower orfice numbers.

Not to mention that BOM is NOT the only cost at play when you are trying to calculate potential profit. And yet even you ignore that very important detail while using your 'guess' at the BOM as the only cost to base your claims on

The iPad mini is not a Nexus 7 killer because it costs too much.

First off, it isn't trying to be. Second it hasn't even gone into pre-orders to claims that it is or isn't are presumptuous and could ultimately prove to be false and the iPad Mini could vastly outsell the current or even upcoming Nexus. We shall have to wait to see what happens when they are actually on sale.

I'm not an Apple basher:
We have 2 iPads, 2 iPods, MacBook Pro, MacBook Air, Mac Mini and a Mac Pro in my household and we also own Apple stock.

Just because you own products from the company doesn't mean you aren't bashing the company.

The 7" tablet market is still Android. Apple dropped the ball.

The 7" market is still Android because Apple hasn't had a 7 inch tablet in the market. So one can't say that Apple dropped the ball with this item. It's not selling yet. Once it is selling this tablet (which is more of an 8" than a 7") could outsell all the current 7-8" items from any company currently in that market. Sure it won't likely outsell the combined market of all OEMs running Android any more than Mac OS outsells ALL the computers that run Windows combined. That's an off base metric in the first place which is why Apple doesn't fuss over the combined numbers in such a way

 

[george-brooks]

1. if they decide to sell both a 'new' iPad Mini and the previous generation side-by-side (as with the existing iPad), then they still have reasonable room to sell the old iPad mini at a lower price and make it seem better value.

Exactly. Next year or in 9 months or maybe even 6, who knows, the new iPad mini will come out, probably with an A6 chip and a Retina display, and it will still be $329, and then the current gen will drop to $229. No one has a right to complain about $229.

Apple thought about what this product line will be in 5 years. They know people are upset about the pricing, but they know a lot of people will also buy this iPad next year when they drop the pricing, and no one will complain about the price of the next generation model.

 

[techwhiz]

Cost of iPad

And since you own Apple stock, you should be happy. IPad mini was never suppose to be a 'Nexus killer'. What is does is establish a mid tier market. As a stockholder, would you want them to sell 20 million units at $249 and $0 profit to 'kill' the Nexus, or sell 8 million units at $329 and $80 profit while Nexus gets their share as well?

Why would Apple try to compete directly with Google and Amazon when their business model is to sell the hardware at cost to gain entry into the market? What Apple is trying to do is to create a premium market (not in term of technical specs but in terms of build quality, reliability, etc) for a slight premium price. There is a market for both the iPad mini and the Nexus.

Actually neither.
A $299 price point to break the metal barrier of $300.
32GB at $329 or $349 would have been nice.
But as it stands, an iPad mini is 70% more expensive than a Nexus 7 with a similar configuration of 32GB.

The mini is for someone that would only buy an iPad, but wants it smaller.
Hey a 3rd gen iPad refurb is only $379. Now, that is compelling.........

I suspect a refurb iPad mini will be in the $275 range when they become available.

 

[IJ Reilly]

The premium is similar to add cellular functionality to notebooks.

Exactly. The propeller-heads think it's all about parts. The people who make and sell these products know it's really all about functionality.

 

[k995]

Apple proved they can be way ahead the current competition when they were the first to purpose a Retina display, the power of the A6 processors, or the just announced Fusion drive mode for the new iMac or Mac Mini

Retina is just hogher resolution

A6 is nothng special

Fusion drive is already being done in simular rashion.

Its great apple is once more moving forward, but i rather see 3 hybrid drives tupe advancements, then the " its thinner then before" wich even infected the desktops , whats next, a super thin mac pro ?