Reflecting on the iPad mini event
kensegall.com
kensegall.com
Three quotes from three stories on Daring Fireball:
>That’s a little more expensive than I expected — I thought they’d at least hit the $299 mark with the entry-level Wi-Fi model.
>We shall see. But remember the iPod Mini, which debuted to similar reactions in January 2004 — it was deemed too expensive compared to the better-spec’d regular iPod that cost just $50 more.
>“Better but costs more” is a gamble. “Better and costs the same or less” is a sure thing. And the iPad is hard to compare to any previous Apple product other than the iPod. The iPod and iPad didn’t enter mature markets — they entered nascent markets with no strong competitors and established themselves as unquestioned market leaders. The iPad Mini’s $329 starting point leaves a price umbrella in tablets that Apple never left for MP3 player competitors.
I think that Gruber disagrees with the price even though price margins has always been their approach.
>You can argue the iPod wasn’t targeted at “everybody”, but it was (and remains to this day) targeted at almost everybody.
Which I strongly disagree with.
I remember buying a used 3rd gen 20GB iPod in early 2005, and it was so expensive then everyone wanted to look at it because they had always wanted one but could not afford it. Friends laughed at me because they had bought Rios or whatever they were called for 1/2 the price.
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[1] 32GB model, no 16GB model in the iPhone5 form factor. At $199, you have to down to 16GB and step back a generation in tech. They clearly don't want people buying into the iphone5 form-factor at $199, no contract, etc.
Apple's growth is starting to decrease. They're no longer getting 100% year over year growth for iOS devices. Even Gruber assumed the 3GS would be available in poorer countries but it hasn't.
Apple is going to have to eventually find growth beyond the iPhone and iPad unless they're willing to lose subsidies for the iPhone or take less margins for the iPad to increase growth.
The growth trajectory of the iPad is unprecedented--100 million in 2.5 years.
Apple is smart about not getting into the situation of having to reduce margins on products--they use economies of scale to reduce costs.
Rumor has it that Apple is only getting ~25% margin on the iPad mini which is unprecedented.
Which is really how any fashionable product works. "Forget that Armani Exchange produces its goods in the exact same country using the same cheap labour as Kmart - we use nicer cuts of fabric and make nicer looking products." Design and materials subjectively increase value, so I can only see the mini selling like hotcakes.