There are arguments that Apples pricing power is limited and that the cost of making a premium small pad like the mini is something like 200 meaning that they break even at somewhere between 250 and 300 considering distribution and profit.  There were arguments for a 250ish (essentially subsidized) and 300ish (bare profit.)  Whereas the base 330 (ok 329 but don’t get me started on the last 9 pricing phenomenon!!) supposedly provides Apple with its traditional high profit margin.

Now this seems to beg the question how do these folks really know Apples costs?  Yes its a public company but to be honest there are a lot of details hidden in the financials that are really hard to parse. Apple is highly profitable but it also has very high costs relative to its competitors who are either one shot wonders or whose HW / OS work is subsidized by a primary line business which the machine; Google-Nexus tab, Amazon-Kindle, Barnes&Noble-Nook, are important marketing&sales outlets, not fundamental products as products…as much as some chattering set blowhards try to conflate the business models.

The iPad mini is something of a steal, if 200 is the cost of a good 7 in screened plastic housed small pad .  Why do I say this?:

1. The above machine might have a higher resolution…but to be honest resolution is not the end of the matter, it enhances a screen, makes a small screen look better,  ut it does not solve the problem that you have to hold a smaller screen closer or display less info to make it readable at all.  And when you are a mature adult the eyes are not so good no more…so a 7.9 screen 40% greater area with the same resolution is (probably) a better deal.  And now one has to light up 40% more area so the battery has to have a bit more capacity, etc.
2. The system has all the sensors including the reasonably good front and backside cameras of the bigger brother, which none of the smaller competitors match.
3. It also offers a decent processor chip that has proven its chops on other machines making it a smooth and reliable operator
4. It’s almost as light and compact as some of its smaller rivals because Apple traded bezel for screen to make it ‘handable’ and thus much more of a reading machine in competition with the near pure readers.
5. It has universally praised design and build standard and remarkable ruggedness (that’s a projection obviously.)
6. It has the AppStore infrastructure &
7. It seamlessly integrates with all the other iGizmos from Apple (of which my family has many.)
8. It’s a good size and capability set for children with their smaller fingers, lower strength, sharper eyes, etc.
9. At 329 its a better deal for the K-12 educational market and oh by the way its big brother and the rest offer a grown up infrastructure for teachers.

I’m certainly going to buy one and it won’t be a low-end unit, though I will also in the near future buy one of the new-new-iPads, with the understanding that its possible if not likely that Apple will upgrade the product again in 6 months.

Why is Apple doing this? It wants to dominate the space in most people’s minds like it dominates the smart phone, standard tablet, one piece desktop, and ultra-portable markets. It has moved sharply into these markets (which were not at the time particularly active) and dominated with yearly product refreshes of significance reinforced with a masterful media circus strategy.  They are late to the game in the small pad market having at first seen it as a value only market, they stayed out till they figured out how to roll it up into the Apple iOs business, which I think they have as explained above.