Comment by technoslut | Hacker News Reader

Comment by technoslut | Hacker News Reader

While this article is interesting, the more interesting story is John Gruber's soul searching on how he feels about the iPad mini – which is where I assume you got the article from.

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.

Gruber's article also says:

>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.

Seems apple is boxed in by the ipod touch @ $299.[1] Too bad. But they are protecting their iPhone market. They won't go below that, because at some stage it makes sense to use a throw-away phone and a data-only iOS device.

________

[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.

I don't think that Apple is protecting the iPod touch but they are definitely are protecting iPhone margins. ThiPod touch is selling less year over year.

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.

I don't see why Apple has to reduce the margins on the iPad or the iPhone when they can't keep up with demand. They sold 5 million iPhone 5s the first weekend and they could have sold a lot more if they could have made more.

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.

Growth, or lack thereof, affects stock value which also can affect future talent employment and current employees. While the iPad may have future growth ahead, many will not pay the unsubsidized price for the iPhone, which is where most of Apple's current valuation lies.

Rumor has it that Apple is only getting ~25% margin on the iPad mini which is unprecedented.

Why not just sell it first to the people who will pay $329, then drop it down to $299 to catch everyone else?

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