Dave Lee

Today Apple announced the the 7.9” iPad Mini (starting a $329).  I want to take a few minutes to share why I think the announcement is a big deal.

First, it’s surprising that Apple didn’t price the iPad Mini closer to the Nexus 7 (which starts at $199).  I was expecting the iPad Mini to come in at $299 or lower.  But Apple pricing the iPad Mini at $329 shows that they’ve made a decision to not compete on price with the cheaper “plastic” Android tablets like the Nexus 7 and others.  Rather than making a cheaper iPad Mini by cutting corners, Apple went all-in and created a tablet with the same precision as their new iPad or even their new iPhone 5.  Apple is clearly making a statement with the iPad Mini - all other tablets are cheap in quality and lacking in user experience (ie., not as many tablet-designed apps).

Part of me wishes that Apple would have been more aggressive with the pricing and start the iPad Mini at $299 or even $279.  But I think Apple is smart here and has a strong positioning statement.  People trust the iPad.  They know it as the best tablet with the best apps.  Apple is leveraging this with the iPad Mini and is basically saying, “Sure the iPad Mini is pricier than other small tablets, but you’re getting quality and the best.”

If the Android tablet experience was close to the iPad’s experience, I don’t think Apple’s positioning would work well.  However, Apple knows that 1) they can build an exceptionally better tablet than any Android manufacturer and 2) the iPad’s user experience is much better than any Android tablet, especially with the plethora of iPad-designed apps in the AppStore.  So, I think Apple’s $329 price for the iPad Mini is smart and gives them enough margin to be significant to their profits.

Second, the iPad Mini gives schools an opportunity to buy iPads at a lower cost than the current $399 iPad 2.  Apple is already making huge inroads in selling iPads to schools, giving them discounts as well as financing options.  At $329 retail price Apple could offer a discount of at least $30 to schools (if not $50 or more) and also offer some very attractive finance and payment options.  I recently was on a plane talking with a very large school board member and I asked him if schools have enough money to buy iPads.  His response is that they all have budgets for textbooks and that money can be used to buy iPads.

The iPad Mini gives Apple an even greater advantage in the education space.  Add iBooks Author (free textbook authoring software) and Apple’s aggressive textbook partnerships with publishers, it’s not too difficult to see Apple extending their dominance in schools.

Third, today’s iPad Mini announcement matters because it’s Apple first new product category announcement in 2.5 years.  Sure, Apple has had a ton of announcements recently but almost all their products are improvements of current and existing product lines.  However, the iPad Mini is Apple introducing their first product in the “mini” tablet market.  Expect Apple to iterate like crazy on the iPad Mini.  I wouldn’t be surprised for new versions to be introduced at least once a year.  And it’s in the iterating of the iPad Mini where Apple will seek to try to dominate the mini tablet market.  Some have described it as how Apple rolls.

Make no mistake.  Apple’s introduction of the iPad Mini today was not a passive move by Apple to just grow iPad sales.  Apple has clearly thought this through and is seeking nothing short of dominance in the mini tablet market.  They have a strong positioning argument - the best mini tablet with the best user experience.  And they will iterate like there is no tomorrow to make the iPad Mini better and better each year.

On a closing note, I think Apple still has a lot of room to introduce new product lines with their iOS platform.  I would personally enjoy a 13” or 14” iPad to browse the internet at home, as well as a 20+” iPad to do presentations in front of small groups.  And I think they would make a killing introducing an iOS watch.

(Read more about my Thoughts on Apple.  Check out my other series too.)