TechnoBuffalo's editor in chief Sean Aune called me this morning and we had a discussion about how much the 7.85-inch iPad mini will cost. We're both baffled as to how Apple will price the device. Ultimately, the Kindle Fire HD, the Barnes & Noble Nook HD and the Nexus 7 are attractive 7-inch tablets because they cost $199, which is cheaper than most options out there. I don't think Apple will go that low, though. Here's why.
First, I think Apple would cannibalize sales of its iPod touch family if it introduced a $200 tablet. Its brand new iPod touch starts at $299 for 32GB of storage. Considering that price point, it's possible for Apple to launch an iPad mini at $249 with 16GB of storage. That way, anyone who wants more storage or a smaller device could easily just gravitate to the 32GB iPod touch. Maybe it will price a 32GB iPad mini at $349, placing it below the 64GB $399 iPod touch… for the exact same reasons.
But we have to consider more than the iPod family. What about Apple's existing iPad 2 and new iPad? I don't think Apple will adjust the prices of either, but the iPad 2 starts out at $399 and offers 16GB of storage. Apple won't cannibalize sales of that model with the iPad mini because it's a totally different product with a much larger screen. In this scenario, I think it's possible for Apple to introduce a $299 iPad mini and just let it compete directly with the iPod touch; they are two different products and users will choose them depending on a required use case scenario. Example: you might buy an iPod for running but an iPad mini for reading and work.
Ok, so now we have two price points in mind, $249 and $299. But what about the model that packs a SIM card for wireless data support? That's obviously going to cost more. The iPad 2 with 16GB of storage for AT&T or Verizon costs $529 without a contract. That's a $130 price difference from the Wi-Fi-only version. So my guess is that Apple's 4G-capable iPad mini will cost between $379 and $429, depending on what the Wi-Fi-only model costs. And that's only taking into consideration a 16GB model.
Maybe Apple will keep the prices down by eliminating features. What if it removes the back camera, for example? That's a cheap module from parts suppliers, but it's something that some consumers may gravitate to the iPod touch, the new iPad or the iPad 2 for. If Apple removes some components, it could prevent the iPad mini from cannibalizing its other devices. A poor, but somewhat viable example, is how it prices its MacBook Air versus the MacBook Pro. It's cheaper because it doesn't have as many features, but the Air is still desirable because it's much more portable.
Am I off base? I don't think Apple can go much higher than $299 for a 16GB iPad mini and still eat up the 7-inch tablet market the way analysts are suggesting it could. If Apple prices the iPad mini too high, then Amazon, Barnes & Noble and Google have nothing to worry about.