So tomorrow the iPad Mini will be announced (probably), and everyone's got their junk in a knot thinking about the cost. There's lots of talk about Apple needing to price the thing as low as the other 7" tablets in the space, because most of these analysts, whose professional life is covering Apple, doesn't understand how Apple tends to work. That line of thinking, that Apple thinks it needs to compete on price, certainly doesn't match how they've ever done things. Apple's always been a premium brand, and you don't remain a premium brand by setting your price guns to "Wal-Mart."
Also, they have become the most profitable company ever, and they're going to just switch modes now? That's nuts.
There are rumors that the thing will start at $329 for the lowest capacity. Maybe, but the $X29 in terms of tablets has so far been reserved to the models with 3G/LTE, not the Wi-fi only models. They tend to be just $X99.
Also, I think most of these analysts have it completely goddamn backwards. They think the way that the consumer thought process is going to go is "I have $200 to spend on a tablet, what should I buy?" rather than the reality, which is: "I want to buy an iPad, because it looks cool and is the only tablet I'm aware of, can I afford it?" By this metric, all other tablets are just crappy knockoffs of the iPad. Think about that for a second: Apple has made almost the entirety of a market into no-name products, with the iPad as the only brand name.
And if that's the way customers see it, then the iPad mini's value will be that it's a cheaper iPad. Apple simply changes the answer to the above question, making the "can I afford it" bit more often a yes. Because it's an iPad, only it's cheaper. It being smaller doesn't matter, because it's going to be cheaper.
I don't understand why this is so hard for so many people to see.
So Apple can get away with charging $399 for the entry level iPad mini (which is my guess, despite existing rumors) because it's still an iPad that's $100 cheaper than the awesome one. And, yes, they still have the iPad 2, but this will be a NEW one that's cheaper than the big one. Seriously, think it through.
My money's on Apple retiring the iPad 2 and replacing it with the iPad mini for the same price. Some analysts will cry foul at the notion that Apple's charging the same price for a smaller tablet, but they'll toss the retina display into it to even it out. Sure, the screen will be smaller, but it will be markedly better than the previous $399 iPad.
Anyone who doesn't agree with me is an idiot.
Shut up.