A $329 iPad Mini Feels Like A $2495 1984 Macintosh

Apple’s Schiller defends iPad mini’s price tag

It’s obvious that the chatter revolving around a $329 price before the Mini’s introduction was a calculated leak by Apple to soften up the market for the inevitable price disappointment.

That stinks.

I don’t want to hear your bullshit spin about the Mini being a “premium” product and how the number and quality of apps matter.

That’s nothing but absolute bullshit and here’s why.

Prior to the introduction of the original iPad, everyone thought the price would be $999. After all, Apple was known for “premium products at premium pricing.”

When the $499 base price was announced, everyone was shocked.

All of you out there might have forgotten that, but I damn well haven’t.

It’s clear that when Jobs mandated the creation of the iPad, he wanted it at a certain price point. And he told Tim Cook the price he wanted to achieve and Cook made it possible by hammering on the supply chain to meet that price.

Here’s what Jobs himself said at the iPad introduction:

An amazing product. Tremendous breadth. What should we price it at?

Well, if you listen to the pundits, we want to price it at under a thousand dollars. Which is code for nine ninety-nine.

When we set out to develop the iPad, we not only had ambitious technical goals, and user interface goals, but we had a very aggressive price goal. Because we want to put this in the hands of lots of people. And just like we were able to meet or exceed our technical goals, we have met our cost goals. And I am thrilled to announce to you that the iPad pricing starts not at nine-ninety-nine …

… but at just four hundred and ninety-nine dollars. Four hundred and ninety-nine dollars.

At four hundred and ninety-nine dollars, a lot of people can afford an iPad.

I don’t see that happening here.

What I see happening here is an Apple executive suite that has forgotten the lesson of the original iPad.

Given everything the original iPad did — and the thousand of iPhone developers ready to start making apps for it — it could have been priced as a “premium” device. But Jobs didn’t do that.

Now, with the Mini, we are given all this crap about it being a “premium” product.

What utter bullshit.

That price seems to me to have been driven by Marketing.

Marketing looked at the iPod Touch for $299 and panicked about making the price of the Mini “fit.”

Steve Jobs would not have done that.

Steve Jobs would have made Cook hammer the supply chain to get the price he wanted the Mini to be — as he did with the original iPad.

And I’m convinced it would have come in below the price of the $299 iPod Touch.

And Jobs would have gotten away with that by spinning the iPod Touch as the premium product.

He would have tied the pocketability of the iPod Touch to that of the iPhone and people would have swallowed that. It would have even made perfect Jobsian sense! If you want something iPhone-like for your pocket, well, you need to pay for that.

Instead we now have the spectacle of the iPad Mini positioned as the premium product — something the iPad was never positioned as being — with a price that reflects a great deal of misguided and really suicidal corporate hubris and outright fear.

Finally, let me remind you of the original Macintosh and the targeted price Jobs wanted for that. From the Isaacson biography of Steve Jobs:

Their first substantive disagreement was over how to price the Macintosh. It had been conceived as a $1,000 machine, but Jobs’s design changes had pushed up the cost so that the plan was to sell it at $1,995. However, when Jobs and Sculley began making plans for a huge launch and marketing push, Sculley decided that they needed to charge $500 more. To him, the marketing costs were like any other production cost and needed to be factored into the price. Jobs resisted, furiously. “It will destroy everything we stand for,” he said. “I want to make this a revolution, not an effort to squeeze out profits.” Sculley said it was a simple choice: He could have the $1,995 price or he could have the marketing budget for a big launch, but not both.

“You’re not going to like this,” Jobs told Hertzfeld and the other engineers, “but Sculley is insisting that we charge $2,495 for the Mac instead of $1,995.” Indeed the engineers were horrified. Hertzfeld pointed out that they were designing the Mac for people like themselves, and overpricing it would be a “betrayal” of what they stood for. So Jobs promised them, “Don’t worry, I’m not going to let him get away with it!” But in the end, Sculley prevailed. Even twenty-five years later Jobs seethed when recalling the decision: “It’s the main reason the Macintosh sales slowed and Microsoft got to dominate the market.” The decision made him feel that he was losing control of his product and company, and this was as dangerous as making a tiger feel cornered.

Boldfaced emphasis added by me.

A $329 price for the iPad Mini is a short-circuiting of the Steve Jobs revolution.

That $329 iPad Mini price is just inexcusable and full of FAIL.

Will the Mini still sell? Hell yes. I expect it to break all records. That’s a reflection of the pent-up demand for it. But if you were to ask people what they expected it to be priced at, no one would have said $329.

Nor would Steve Jobs have said $329.

Steve Jobs was a businessman and a revolutionary.

The people running Apple today are just businessmen.

The $329 price for the iPad Mini is glaring proof of that.

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15 Comments

Filed under Apple: The Company, iOS

15 responses to “A $329 iPad Mini Feels Like A $2495 1984 Macintosh

  1. ViperHockey

    To be clear, did you expect Apple to sell it for $299? That’s what the low-end iPod Touch sells for and it seems to do pretty well. They aren’t going to undercut inferior devices like the Nexus 7. They don’t have to. Everyone knows those machines are selling for no profit. Apple’s not in the charity business. The price will come down over time. They don’t have to lower it now, and you don’t have to buy one.

  2. Glinda Harrison

    Great article, Mike! I agree with your points wholeheartedly. I wanted an iPad Mini. I had pretty much prepared to buy one. Buy their pricing, they lost my sale. Especially as, by offering a new large iPad version, they have told me the shelf life is now six months, not a year…. Sorry, I am not buying that.

    Now, does anyone know what happened to all the iPad 3 models? Apple’s websites are only offing the new lightening connector model. What happened to all the threes?

    • mikecane

      Hm, I have no idea about the switch with the 3 and the original 3 being gone.

    • Kel Brown

      I find your comment about the short upgrade cycle — confusing.

      First, they’ve not stated that they’re now going to refresh products at that frequency. I imagine they did it unify the product base around the lightning connector. If anything I think the 3, which I have beside me now, was put out because they didn’t want to wait until now to ship an upgrade to the 2. Having the 4 announced yesterday doesn’t obsolete my 3. It makes me want the 4 but the shelf life is still the 2-3 years it had wthen I purchased it. The shelf life of your device is exactly the same it was the day you purchased it (more about that further down).

      The competitors refresh, announce and abandon their own more numerous products at a much higher rate and they do obsolete them faster because operating system upgrades are rarely allowed and when they are they’re years late. This is a little off point but compared to the competition Apple pace seems glacial and positively compassionate.

      What’s more Apple is still selling iPad 2 and iPad mini with the A5 chip which means developers will continue to target those system specs for the Apps so anyone with those device will hardly have to worry about the speed and capabilities of their iPads except for the most demanding of high end games. The mini, because it runs iPad apps without modification and sports a slower chip, will pretty much guarantee, at least for the this generation, that the life cycle of all iPads will be extended.

  3. Kel Brown

    How much would you pay for a Retina Screen iPad Mini? $329 sounds about right. The current model would go to $279 and that’s revolutionary, or at least revolutionary enough even if you have to wait 6 months for spring for it to be realized. I think the price is there just to set the ceiling on the true premium product that they’ll debut next year or in 6 months but Apple wants to put that number on the record so that when they announced the Retina version they can say, “for the same price as the old iPad mini”. That’s worth more than the few sales that might be lost in the interim and like you I think they’ll sell all that they can make anyway. Apple plays the long game and they know they’ll put a retina on this device as soon as the battery can bear it and they probably have a good idea what the price would be for the device and imagine it’s very close to $329.

    Kids don’t ask their parents for a 7″ tablet they ask for an iPad and now they have one that’s ~$200 cheaper than it was yesterday.

    • mikecane

      That’s an interesting idea about the price being a placeholder for a Retina display. Except the 3 with Retina still came in at $499 base price. You can’t convince me that back in 2010 Jobs foresaw a tablet-sized Retina display being that cheap. Apple had to squeeze to do that, and my sense is that they didn’t even try with the Mini’s price.

      • Kel Brown

        They would have delayed the Retina iPad until they could hit the $499 mark or the $599, 32gb model similar to what they do with pricing on the new MacBook Pros.

        I’d bet they had a retina version of the mini to go but whether it was a matter of lack of screen or chip production capacity or cost that kept it back they have a clear idea of what it will cost and how much they need to sell it for.

        Now that we’re speculating fact free:

        2010: I really think they might have. Cook being the supply guy he his and with Apple about to ship the first retina iPhone a couple months after iPad 1 they probably did projections on how fast the price would come down and the screen size would go up and volume of sales and projected a price floor. And remember the margins on the $499 are nothing compared to the 32 and 64gb models, plus the kick backs from cell companies for the models with cell radios.

        I know they’ve got a iMac in the lab with a retina screen that probably costs the same as a Tesla Roadster and a powerplug to match. As soon as they can get a graphics card that can push that many pixels and a customer who will let them use two paralell thunderbolt cables to handle the bandwidth for a matching retina external monitor they’ll sell that for as close the current price of an iMac as they can.

        I admit I was surprised by the price of the mini myself. I thought for sure the entry model would top end at $299 but I got over the shock pretty quick when I considered it’s specs versus the competition and inevitability of retina model. Especially considering the competition. At $199 amazon has told use they’re not making anything of the sale of a 7″ Kindle Fire. The iPad mini is 7.9, faster and thinner and needs to make a profit so $329 is in the park. I’ll resent the $29 extra little but I’ll get over it when I’m alone in the dark with my iPad w/Barry White setting the mood.

  4. I think they should have dropped the price of the iPod Touch and slotted the Mini into that price point instead. I didn’t think it would be below $299 at best, and I had $349 in my head as the worst. Honestly, the people who buy the Mini aren’t going to be people who were even considering a lower price point Android tablet. They’re people who were going to buy or wanted to buy a full-size iPad, and are excited about the smaller size and/or price point. Do I wish it had been cheaper? Yes, but only because my husband wants one. Am I surprised by the price? not even a little bit. Maybe if it had a Retina screen I’d be more interested, but I’m still in the market for a new full-size iPad.

  5. Daniel

    You know, I was initially disappointed when the $329 price rumor was floating just prior to the announcement. I too thought that if Apple priced the iPad mini at $249 they would have scored a major win and obliterated the rest of the smaller tablet market.

    But the more I thought about it, the price seemed to make sense. Trying to match the Kindle and Nexus would validate their pricing (even though they are selling them at cost, just trying to stay in the game). Selling at $249 would probably also have decimated regular iPad sales (harder to justify spending $500 on an iPad, if you could buy two iPad minis). The current prices ($329, $399 and $499) give customers the incentive to “upgrade” for “just a little more money”.

    This is Apple’s first manufacturing run and it is just before Christmas. They won’t be able to make enough as it is. Lower pricing would lead to insane demand, long delays and tons of disappointed customers. I do think that by next year the factories will be fully ramped up and they can afford to lower the price on the current mini, and yes, probably introduce a retina iPad mini at the current price.

    I do like your argument that the introduction of the iPad was Steve finally getting a chance to control the pricing on his next computing revolution. But I think he probably would have seen the iPad mini as a part of this current revolution, not the next one.

    • mikecane

      >>>selling at $249 would probably also have decimated regular iPad sales

      That never stopped Jobs in the past. Besides, the money would have flowed to Apple anyway. And it might have worked out that selling two Mini was more profitable than selling one iPad.

      • Daniel

        But the regular iPad was Steve’s vision for decades. He had to be cajoled into providing the mini. At $329, they probably ARE more profitable selling two mini than one iPad.

        It seems to me that a lot of the constraints to Apple products spreading even farther is the challenge of producing hundreds of millions of iOS products every year, especially the iPhone. Take a look at the margins on the iPhone, and how many they could sell if they created instead the $249 iPhone for the prepaid market. Then China, India and Latin America would go crazy. But they just can’t serve the entire phone market.

        Apple’s CEO should try to hire the next Tim Cook.

      • mikecane

        Everyone seems to forget that Apple isn’t the only company manufacturing in China. The millions of phones that are sold by LG, Samsung, etc, are made in China too, by the same manufacturers in some cases, such as Foxconn and Pegatron. There are probably more non-Apple devices made in China.

        The iPhone is beginning to get into the prepaid market. But I really haven’t paid much attention to the prices there yet.

  6. Eric

    I am glad now that I purchased a kindle keyboard and kobo touch instead of waiting for the iPad mini. The two devices cost $200 AU close to half the iPad mini price and I have had them for a while too. I will of course have to upgrade my iPad 1 at some point but I do not think the mini will be that replacement.

    An off topic note do not buy a touchscreen ebook reader if you are left handed. The kobo touch has no buttons to turn the page and I have to use my right hand as I automatically hold the device in my left. The touch responsiveness is not the best either compared to an ipad for example as it lacks the sensitivity. Sometimes I have to touch the screen 2,3 or 4 times to make it turn the page.

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