The problem is that the only reason someone would buy this product over iPad 4 is price, but the price is not that much lower.
Who is the person who can afford the $329 for this but can't afford the extra $170 to get iPad 4?
The assumption about price being the only driver here simply astounds me. Why on earth would a person buy a large iPad when wanting a tablet the size of the iPad mini? These are two different devices not only based on their internal specs but on their SIZE and WEIGHT, which believe it or not are significant properties.
I was equally amazed when MBAs came out and some people said why get that when an MBP would suffice, too expensive for what it offers, it will never fly, blah blah blah. Right, so within a couple years, the Mac Book Air is the laptop of choice. Why? Because its specs, including its weight, meet the needs of enough people to make it extremely popular.
Size and weight can matter. They matter enough to be deal breakers when those attributes aren't right for the intended purpose. Now I happen to like both sizes, and there's nothing wrong with that either. I don't have a problem looking at costs of one versus the other. I don't compare them to each other. They are not comparable in my book.
As far as the pricing goes, any engineer can tell you that making something "like this" in a smaller package is not like sticking it the dryer and turning up the heat to shrink the stuff. So there are some costs in there related to getting iPad 2 functionality into a much smaller package, swapping in the better cams, etc. The iPad mini can bear a higher price in part due to its introduction in time for holiday sales (and is that a crime yet? don't think so), thus helping to offset some smaller margins on the rest of the stuff released in October. But that doesn't mean the thing isn't priced aggressively for the functionality it offers in that size class of tablet.
When you buy an Apple iDevice now you are buying into one heck of an ecosystem that supports it. That's part of the draw, so why shouldn't the ipad mini's price include some acknowledgment of that premium? I don't know about you, but in any comparison of support and customer service between Apple and some of the other tech gear or peripherals I've bought over the years, it's not Apple that suffers, that's for sure. Finally, when you buy Apple hardware there's a pay-forward component in the price tag, for the innovation involved in their future products and new product lines. Those are clearly worth paying to a company with the innovative track record of Apple.
