iPad Mini A Great 7-Inch Tablet, But Price A Success Barrier

Yesterday at the Apple iPad Mini launch event I had a chance to play with the smaller Apple tablet for about 10 minutes. It initially did look and feel to me, contrary to the statements of Apple SVP Phil Schiller, like a “shrunken iPad.” However it was also immediately clear, as has been pointed out several times in other “hands on” reviews, that this is the best small tablet now on the market.

Apple may have built the best-quality 7-inch category tablet but the ultimate success of the Mini is far from certain. Why? Its price. I have been harping on this for several months.

Yesterday Danny compared the pricing of the Mini ($329 to start) to rival 7-inch tablets from Amazon and Google. Apple believes that consumers will be willing to pay more for a higher quality tablet; however I’m not so sure.

I have yet to use any of the new Kindle Fire tablets. However I own a Kindle Fire 1.0 and can say without hesitation that it’s mediocre as anything other than an Amazon content-consumption device. (The new ones are better undoubtedly.) Still, when it was introduced it broke new ground chiefly in terms of its rock-bottom pricing.

When Google introduced its much better Nexus 7 it was forced to match Kindle Fire’s $199 pricing. It sold well and quickly became the tablet to beat in the 7-inch category. Better Nexus quality at the same $199 price drove those Nexus 7 sales. Next week we’ll see what Google unveils at its October 29 event and whether it offers an upgraded Nexus 7 (in addition to a 10-inch tablet).

At the iPad Mini event yesterday in San Jose, California Apple took aim at the Google Nexus tablet and described it as a “stretched out smartphone” without any (tablet) apps. Those critiques are accurate yet they haven’t really undermined my experience with the device. Conventional web pages look OK and so do most smartphone apps, which in many instances do look stretched. What looks bad, however, are regular smartphone ads on 7-inch tablets. Here’s an example from the CBS news app on my Nexus 7:

As an aside I’m sure we’ll see many more apps optimized for 7-inch devices as well as new ad units designed to take advantage of the larger screen (the NY Times app is doing this successfully).

Apple priced the Mini at $329 probably to protect the iPod Touch ($299 to start) from being cannibalized. Had the Mini come in at $199 or $249 or even $299 it would instantly have killed most iPod Touch sales. Why would you want a touch (even for your kids) when you could have a Mini for the same or less?

So we get a $329 Mini . . . and a $399 iPad 2 . . . and a $499 iPad 4/retina display.

I’m sure Apple has thought very carefully about pricing but it may have miscalculated this time. For example, if the Mini had entered the market at $249 (maybe even $299) it would almost certainly be assured massive success among people seeking a smaller tablet. But $329 is going to give many people pause when two other credible 7-inch tablets are available for $130 less.

The fact that all the iPad (and presumably iPhone) apps work on the Mini is an argument in its favor. But I’m not sure that “ordinary consumers” are going to perceive all the nuances and quality differences that Apple has built into the Mini as justifying the premium. Some undoubtedly will and be happy to pay more.

But for those buyers who are price sensitive at all — and the majority are — “almost as good” at $199 is probably going to trump “best” at $329.