iPad mini - Product - Image

I was relatively surprised to see that Apple dropped the price of the original iPad mini to $299 today. I think a lot of folks thought it would disappear entirely into the vapor, leaving the iPad mini with Retina Display in its place. I think Apple missed the mark in two ways, though. First, it should have dropped the price down to $229, where it would compete directly with the Kindle Fire HDX, the Nexus 7 2013 and a host of other Android tablets. At its lower $299 price point, it still largely misses the mark of opportunity for consumers who don’t see the need to spend more for an Apple tablet.

And why should they? The iPad mini is now only available with 16GB of storage. Apple removed the 32GB and 64GB options entirely. It also offers a much worse screen than what’s available on tablets that cost $70 less. I see no real attractive reason to buy the iPad mini at $299. Worse, it gave Apple a reason to price the iPad mini with Retina display at $399, instead of at the same $329 price point that first iPad mini launched at.

I understand parts are expensive and that this is all about Apple margins. The A7 processor in the new iPad mini isn’t cheap, nor is that Retina display. The more iPads Apple sells, the more it makes at these price points. I get it: that’s how margins work.

One has to wonder, however, at what point does this backfire? How many consumers will Apple lose to Android because it won’t drop its prices enough? I can see that Apple is trying to up the value proposition by offering iLife and iWork for free, but that’s still not covering the difference in price. Speaking of price, what’s up with the iPad 2?

The iPad 2 may still be a popular seller in some locations, but you really have to be off your rocker to be suckered into dropping $399 for a product that was first introduced into the market in March 2011. It lacks a Retina display, it still has Apple’s old 30-pin port connector and, while it runs the latest version of iOS, it’s a tablet we wouldn’t normally recommend to our readers any longer.

Apple should have dropped the iPad 2 entirely, moved the iPad 4 down to $399, and put the iPad mini price point to $229 where it can more aggressively compete against Amazon, Google, Asus, Samsung, Lenovo, Acer and thousands of other Android OEMs. It also would have set the stage for a nice expansion in China, where Apple is also struggling to gain smartphone market share.

Perhaps Apple doesn’t want to dilute its brand, though. Lower prices can lead to the impression of cheap products. Apple’s known for superior build quality and design, so I guess the price has to match. It just seems like a lost opportunity.