Wednesday, October 24, 2012

Apple Products Not Over Priced (But the iPad mini may be)

Steve & Apple Inc.
Steve & Apple Inc. (Photo credit: marcopako )
I have an auto translation mechanism in my brain that changes "X is too expensive" into "X costs more than I'm willing/able to spend". I'm not being harsh here either. We're all a bit narcissistic so the tendency to project our own feelings onto the rest of the world isn't surprising.

In the tech world Apple is the company that gets the most flack for their pricing. This has been going on for decades now and will almost certainly continue for as long as Apple is a viable company. What most people fail to understand is that no company or product can realistically appeal to everyone. Apple is no exception. 

I could write a bunch of text here about Apple being a premium brand and how that impacts their ability to price but I've said it all before and its really not my primary point right now. Suffice it to say that the billions of dollars Apple has in the bank server as excellent evidence that their products are as a general rule not over priced. With one exception I think they are dead on again with their latest slate of new products.

To be blunt, the iPad mini looks like something Steve Jobs would have killed circa mid 2010 when he was still very much involved in the day to day operation of the company. It's woefully short on the technical side which isn't fatal but what is worse is that at the prices Apple is charging it is short on value. That won't stop people from buying it but over the mid to long term it is much more likely that people's good feeling for the company are going to be eroded.

The problem Apple appears to be addressing with the iPad mini is that competitors like Amazon and Google are selling a lot of units in the smaller form factor tablet market. Smaller tablets are much easier to carry around and if people have them they'll be more likely to partake of whatever ecosystem their tablet supports. Apple is primarily a hardware company but they make a fair chunk of money off their apps and media sales. Seeding the field to their competitors was not something they could afford to do. 

Lets assume Jobs was steadfastly opposed to the smaller form factor tablet. The man was a genius but he was also been known to be stubborn on things that he probably shouldn't have been. Shipping the original NeXT computer with a very immature optical disk technology as its only storage being one of many examples I could cite. If this is true it would mean Apple has had just over a year to get the iPad mini to market. That isn't a lot of time and they would have had to take shortcuts. Like perhaps reviving a design that Jobs had shot down. That would explain the sadly out of date tech specs. This thing is essentially a smaller more refined version of the iPad 2, a product that is now two generations behind Apple's current full sized iPad.

So maybe this is a stop gap and Apple didn't want to release it at a price point they would have to maintain for future generations? If this theory is correct we could see a next generations iPad mini in less than a years time that supports a retina like display, some variant of the A6 processor and at least a gig of memory. A device with those kinds of specs would be justified to sell for the price points Apple is currently asking.

Personally I don't see any reason to purchase this initial version of the iPad mini. Apple underwhelms badly on the technical side and are asking for an even bigger premium than normal on the price side. The math just doesn't add up.

They'll likely still move a lot of units but I suspect customer satisfaction on this first generation version is going to be lower than is typically the case and that could start to hurt them in the longer term. A company as successful as Apple can afford an occasional miss but they can't make a habit of it. This is particularly true now that Jobs is gone.
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