Tim Cook: iPad Mini Priced 'Aggressively'

[cbw87]

Let me repeat it since everyone seems to have missed it:

SIMPLE REASON FOR iPAD MINI PRICE STRATEGY:

Why price it any cheaper when they won't be able to make enough (due to manufacturing ramp / yield issues) to satisfy demand this quarter at that price?



(Although I think looking at it in terms of manufacturing cost is looking through the wrong end of the telescope (e.g. iPhone and iPod Touch have similar costs but very different price points), a second, smaller reason: although it superficially seems to have a similar BOM to competitor tablets, the aluminium case and new GF2 screen tech are much lower yield and therefore much more expensive to make than similar elements on those competitors).

Why do some of you not get these two simple facts?

If you think a competitor is a better value proposition, go buy one - Apple will still sell every single one of these it can make this quarter.

*Disclosure: I don't like the price either - I wanted one at $299. But I think the reasoning on this is right, as an AAPL shareholder.

 

[dukebound85]

Think about it this way. The iPad mini is basically a smaller iPad 2. (So no need to whine about the lack of an A6 or retina display; the iPad 2 doesn't have those either.)

Aluminum costs less than a dollar a pound. That means there's less than 25 cents difference in cost for the aluminum between the 2 and the mini. The machining on the mini would be ever so slightly less, say a dollar or two.

The screen presumably costs less, but as stated somewhere else maybe $5 less. Call it $10 for good measure.

Everything else content-wise would be about the same. So something that costs only $10-15 less in just parts alone, with others costs the same, they are selling for $70 less. That's aggressive.

that is hand wavy logic if I ever saw it lol

 

[aperry]

This is deliberate. iOS is the genuine article, the original. This is also why Apple isn't radically changing the styling of the iPhone.

They are making them icons the way the coca-cola bottle shape became an icon.

I can't tell if this is sarcasm.

 

[econgeek]

Why not double the pixel density of the iPad 2 for the next iPad Mini? Surely that would be much better, whether it's "retina" or not I don't know...

That would work, and they might do that in the future, but they can't do that now for a couple reasons.

The primary reason is cost. This would probably add $100-$150 to the manufacturing price of the device, if they did it today.

Second is availability. The lamination process Apple has developed produces really high quality displays-- and this is a huge competitive advantage-- but there are only so many such displays they can make in a month.

To do what you suggest would not only drive the price up to where it is near the iPad price (remember the iPad has several years of driving costs down with volume, while the mini is a brand new form factor) but it would significantly lower the availability of the device. (which actually makes it even more expensive since there are lower volumes.)

For new devices/form-factors, Apple has to strike a balance that will let them manufacture 10-50 million of them the first year, and at a reasonable price, even though the costs are much higher for new models (a lot of new molds have to be made, new machinery, etc.) and new technology (This screen lamination method didn't exist a year ago.)

 

[paul4339]

I would assume he means that the ipad mini is priced aggressively within the apple ecosystem.

Remember that this is an EARNINGS call. The audience are investor and shareholders that Tim is legally accountable to... although I'm sure he *knows* that the news will be published to the consumer.

So...
- he can't say, hey shareholders, we just totally screwed the consumer. Next quarter earnings are gonna be great!
- and he can't say, we are taking a haircut on this one, investors. Our gross margins are gonna tank.

So he says something like: we aggressively priced the product well below our avg gross margins, but will bring costs down over time thru economies of scale like we did with the other products etc


.

 

[rmwebs]

The fact that you had to google a mental health board to help make your argument speaks volumes about your own condition.

You can compete with the 7" tablet market without sacrificing screen quality. Like I said, charge the premium give us the premium- especially at a time when you've been pushing this as a standard for websites and Apps.

No..you cant. Putting a retina display in it would have put the price up, and we'd be looking at a $450 tablet.

The bottom line comes down to price - if Apple want to compete in the 7" market, they needed to keep the costs low (which is one of the reasons the Mini doesn't have things such as a GPS chip in the 3g model, unlike the full iPad).

Also, at no point have I been pushing anything about the retina being a standard for websites and apps.

 

[econgeek]

I can't tell if this is sarcasm.

That is a comment about yourself.

 

[Lazy]

Yes, the iPad Mini is a beautiful device.

I still won't buy one until it's upgraded with a retina display and A6X processor.

After all, if the smaller iPod Touch can benefit from the premier display and the iPhone 5 from the more powerful chip, why not the iPad Mini?

The mini would benefit from those, but using them would also mean that it would have to cost more. I'd hate to hear the carping about the price if it was $429 instead of $329!

 

[econgeek]

Let me repeat it since everyone seems to have missed it:

They haven't missed it, they don't care.

They're here to bash the product and the company. It doesn't matter to them how logical or rational the bashing is-- its completely irrelevant.

Anything they can say to try and make the product look bad, or to insult members of this forum, they will say.

Hater's gonna hate. Can't expect logic from them. Or even honesty.

And with that, I'm signing off. Life is too short to waste it pointing out nonsense on the internet... you'll never run out, and it will do no good.

Don't get exasperated with them, just go do something more fun.

 

[xofruitcake]

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?

170 over 329 is about 51%.. A lot of people cannot afford that extra 170.. People in Latin America, China, Philippine, Thailand, Eastern Europe, Africa.. Even in US, there is a lot of people who $170 mean a lot.. Just because you can afford it does not mean others can.. Go out a little bit and talk to more real people will help understand the economy. Ipad mini will be a big seller outside of US. It is a much better version of Ipad 4. It is cheaper, ligther, thinner, and can do 80-90% of what Ipad 4 can do and more portable to boot...

 

[scapula002]

as much as i would like to own a mini

i would love to own a mini iPad, but the price of 500+ dollars for a 64 GB mini is Discouraging.

The proof will be in the initial sales...and the later ones too.

 

[daneoni]

VERY different definition of "Aggressively" there Timmy.

 

[iSayuSay]

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?

Or get a heavily discounted iPad 3rd gen? It's still as fast, if not faster than current Mini. It has A5X instead of A5

 

[iMule]

We know what will come next in the mini upgrade — a retina display. I understand the logic behind the display size... makes good sense.

$329 is a good chunk of dough for a shrunken iPad 2. I wonder if they'll have mini optimized apps? Probably will have to when the retina model arrives.

 

[Konrad9]

A bit surprised by the defensive tone.

A simple, "unlike our competitors, we don't make crap", should've been sufficient.

That's why all of the Surface reviews have been soooooo negative, right?

Oh wait.. they've all been unexpectedly glowing.

 

[tonyy]

I was skeptical during the iPhone 5 keynote and didn't think much of it. Bigger screen, faster, blah, blah, blah. But when I held it in my hand for the first time and used it for a bit.. I was really impressed.

I think it will be the same way with the iPad Mini. Sure, on paper its so-so but once we get our hands on it, some of us may change our tune.

Being how thin it is, how light it is, and some are actually saying the screen is pretty sharp makes me look forward to seeing one in the store next week.

 

[xofruitcake]

No..you cant. Putting a retina display in it would have put the price up, and we'd be looking at a $450 tablet.

The bottom line comes down to price - if Apple want to compete in the 7" market, they needed to keep the costs low (which is one of the reasons the Mini doesn't have things such as a GPS chip in the 3g model, unlike the full iPad).

Also, at no point have I been pushing anything about the retina being a standard for websites and apps.

more than the price. The current retina screen in Ipad 3 and Ipad 4 is a power hog. It eats up the battery like no tomorrow. So if they want to put retina into Ipad mini, not only the price has to go up, the size and weight of the tablet has to go up too.... The next generation of LCD screen will solve the problem but not right now.. Apple make the right trade off here..

 

[yyjerseyian]

Typo in the transcript

"Dual band Wi-Fi" not "Dual bank Wi-Fi"!

 

[69650]

Not bothered either way what Steve said or meant. I like the size and I'm going to buy one next week regardless.

If people don't like it and it doesn't sell they'll pull it and that will be that. At least they tried and are bringing new products to market. It won't suit everyone I accept that but it suits me and that's all I'm interested in and I suspect that's all most customers are interested in. Personally I think it will sell like hot cakes and will be this years number one Christmas wish list product.

Now all we need is a 5" iPod touch for wicked pocket gaming and I'll be sorted.

 

[Boomish69]

Greed, pure greed, Apple are doomed with this one, at least in Europe but when did they ever give a toss about outside America.
The Galaxy S3 is far better than the iphone 5 ( I was all set to upgrade until I saw it) and people will buy the cheapest tablet even though it's not as good as the iPad mini as it's simply expensive! as is most of Apple produces..

 

[Risco]

No Tim, it is priced to maximise profit.

 

[skunnykart]

Priced aggressively? LOL

Aggressively for PROFIT$$$ hahaha

I reckon wait for revision 2.0 with retina and a better price point.

 

[Webduo]

Consider it pre-ordered

I'm in a household with one iPad2 and one iPad3 - and the mini is definitely going to be pre-ordered here. I don't pretend that I don't really love my Apple toys, but I've become a huge fan because I have owned/used a competitors smaller product - and that has made me want this mini all the more (perfect for traveling or back and forth to work/home). The competition gets better with each product they release, but it still doesn't come anywhere close to the experience I've had with Apple's pads. It's not just the feel of the quality or the hardware - or the operating system - there is a lot to be said for the experience of the combination of the three. Like Apple or not - there is no denying that they own the "full package".

I don't see anything wrong with paying $199-$250 for the competition because quite honestly after using them, they don't justify a higher price tag - but I have no doubt that the iPad mini will justify its price point after the first use. Just one man's opinion.

 

[Jetson]

The goal of the iPad Mini it to compete with the 7" tablet market, not sell another iPad Retina at $500.

I really dont get how dumb some people can be. Sorry, but it has to be said.

Good heavens man, the guy is just expressing his opinion.

By the way, I think that your conclusion is incorrect.

The 7" market such as the Fire DOES have the higher resolution screen, whereas the iPad Mini DOES NOT.

How is the iPad mini competing? Certainly not on price nor on all of the features that the consumer wants.

 

[monaarts]

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?

Really!? I guess you don't see why people buy the 13" MacBook Pro instead of the 15" either? Oh wait, it works better for some people.