TECHNOLOGY SPECTATOR: Apple's stubborn, Mini price point play

Apple has released its iPad Mini and while some analysts are concerned Apple will lose ground to rivals Google and Amazon, the tech giant is refusing to engage in a race to the bottom on price.

Technology Spectator

Apple has lifted the lid on the iPad Mini and the Cupertino-based tech giant reckons that the device has enough firepower to lure consumers away from the offerings by Google and Amazon. The key factor was always going to be the price and Apple has stuck to the script of being a premium player in the market. Priced at $US329 for the entry level Wi-Fi model, the iPad Mini is more expensive than what some had hoped for, and certainly a lot dearer than the Google Nexus 7 and Amazon’s Kindle Fire HD, both of which are near the $US200 mark.

The higher price point played a significant in role is sending Apple’s stock down 3.2 per cent at to $US613.36 on Wall Street, as some investors were disappointed by a lack of killer instinct on the part of Apple. Many had hoped that Apple would go for the jugular with the iPad Mini and blow Google and Amazon out of the water and pricing the iPad Mini at $US200 would have certainly done that. Apple has instead opted to maintain its margins and is hoping to leverage its substantial brand equity and its healthy app ecosystem.

That strategy was evident during the Apple event with marketing chief Phil Schiller indulging in a bit of trash talking as he gleefully compared the iPad Mini with Google's Nexus 7 tablet, citing feature by feature why the new Apple device was everything the Nexus isn’t.

"Theirs is made of plastic," Schiller said, referring to the Android tablet. "The entire Android product is thicker and heavier."

"Others have tried to make tablets smaller than the iPad and they've failed miserably," Schiller said during the event. "These are not great experiences."

As far as Apple is concerned, the pitch is all about quality hardware, quality experience and maintaining the design focus that has become its hallmark.

At 7.2 millimetres thin the Mini is about as thin as a pencil and it only weighs around 308 grams. The 7.9 inch device boasts a screen resolution of 1024 by 768 pixels and runs a dual-core A5 chip. There is a FaceTime HD camera in the front, a 5MP iSight camera in the back and all the usual bits and pieces, including the recently introduced Lightning connector.

So there’s plenty of bang to keep the Apple fans happy but not everyone is convinced by the tech giant's strategy.

According to Mizuho Securities analyst Abhey Lamba the $US329 starting price point leaves room for competitors to deliver alternatives.

"While the announcement was largely in-line with expectations, two items likely disappointed investors,” Lamba wrote in a research note.

"One, the iPad mini’s price-point leaves significant room for competition to establish an alternate eco-system in the tablet space and secondly, iPad shipments for the fiscal fourth quarter were likely below expectations by about two million.”

Meanwhile, JMP Securities analyst Alex Gauna is also a tad confused about the pricing

"It's coming in the range that most were grumbling about and that, quite frankly, we're a little bit concerned about," Gauna told Reuters.

"It's a little confusing at this juncture to try and figure out how it fits into the line-up. Is it going to cannibalise the more expensive iPad?"

"It is worth noting that there are zero-margin products out there competing with them now... and that is presenting some challenges to Apple."

The iPad Mini might be designed to put Google and Amazon back in their place but Apple evidently had other things on its mind, namely putting a spanner in the works for Microsoft as it gets ready to release its very own hardware, Surface.

Apple has also refreshed its existing product line, with a fourth generation 10-inch iPad, a 13-inch Macbook Pro with a so-called retina screen and a new iMac.

The upgrade to the new 9.7 inch iPad, just six months after its launch, sees Apple bringing all the bells and whistles to its flagship tablet. The updated iPad has a faster processor, a better camera and is ready to ride the global 4G LTE wave, including in Australia. The good news is that there is no change to the price tag with a Wi-Fi-only version with 16 gigabytes of memory still selling for only $539.

The MacBook Pro now sports a Retina display and the new model is considerably slimmer with Apple ditching the optical disc drive and a traditional hard drive in favour of solid-state "flash" memory.

The interesting thing to note here is that Apple has usually refreshed the iPad on an annual basis so this move is departure from its standard modus operandi but it shouldn’t come as a surprise.

By giving its flagship tablet extra juice, Apple has raised the bar just that little bit higher for Microsoft and its baby, Surface. The same goes for Google, which is planning its own major product releases this week. The fourth generation iPad and the iPad Mini will invariably set the benchmark that Microsoft, Google and Amazon’s new devices will be measured against.

By opting against joining the race to the bottom on the prices Apple has also managed to send a message to its flock that it isn’t willing to throw all of Steve Jobs’ legacy out the window in a bid to keep the competition at bay.

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