There is little doubt that Apple will be announcing a smaller more compact iPad. The 7.85-inch tablet will likely be announced at the iTunes event in October a few weeks after the iPhone event.
There has been speculation about the cost of the iPad to manufacture. Tech-thoughts.net has reviewed the parts necessary to build an iPad mini, and the pricing doesn’t bode well:
Based on the estimates above, Apple’s gross margin for the iPad Mini would be between 30%–37% at a $299 price point and 16%–24% at a $249 price point. As I’ve stated before, any gross margin below 30% would be extremely unpalatable to Apple’s shareholders, making $299 the only reasonable price.
The analyst is using the Kindle Fire, Nexus 7 and the full size iPad bill of materials to project the cost of the device. He may be dead on with those numbers. Because we know the Nexus 7 is shipping for cost, there is some validity to his numbers.
- Apple won’t price it without profit. They aren’t going to sell it for $199 if it cost them $190 to make. If this analyst is right, expect an iPad at the price point he suggests.
- Apple has been able to get costs much lower than competitors for it’s iPad, iPhone and even MacBook Air product lines in the past, I see no reason they wouldn’t be able to get lower costs than Google for the iPad Mini. Apple may be able to beat these estimates.
- Apple won’t come into a market where they aren’t going to be a strong competitor. The product team at Apple knows that the Nexus 7 and Kindle Fire sell for $199. When it comes to the iOS products, Apple’s not the high cost provider anymore; they have very competitive prices. That said, I believe Apple will find a way to sell it for $199, or give it the features it needs to be worth $100 more than competitors.