Apple's iPod touch pricing doesn't leave space for the iPad mini

If Apple has priced the iPod touch, starting at $299, then how does this affect how the technology giant would price the much-anticipated (but as yet totally mythical) iPad mini 7-inch tablet?

Along with unveiling the new iPhone 5, Apple also announced new iPods. One iPod that saw a major update was the iPod touch, or Apple's 'iPhone without a phone'.

This is all very well and good, but rumors are abounding that  Apple will lift the lid on an iPad mini with a 7-inch screen  sometime next month. Where does the new iPod touch leave the iPad's little brother?

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The fifth-generation iPod touch -- which Apple says is the world's most popular player, and the most popular portable gaming device -- has received a significant upgrade. Along with being thinner (6.1 mm) and lighter (88 grams) than the previous iPod touch, Apple has given it the same 4-inch display as the iPhone 5 and the same A5 processor that's been used in the iPhone 4S.

There's also an updated 5-megapixel iSight camera, the new Lighting dock connector, and a larger battery.

There's also a storage bump. The fourth-generation iPod touch came in 16GB and 32GB flavors, while the new fifth-generation iPod touch comes in 32GB and 64GB flavors.

And to top all this off is a price bump. The 32GB version will cost $299, while the 64GB version will set you back $399.

And then we have the supposed iPad mini.

The biggest iPad mini conundrum is pricing. The iPad 3's pricing starts at $499 for the base model, while the iPad 2 starts at $399. An iPad mini would ideally need to be priced at or below $299 in order to remain competitive in the face of the iPad 2 and 3.

The problem with trying to scale down the iPad 3 is that the numbers don't add up.

Even assuming that making a smaller iPad costs 20 percent less than making a full-sized model -- factoring in that components are now-cheaper than they were back in March -- the component and marketing costs of the devices would still be in the region of $250.

Believe it or not, shrinking an iPad doesn't shrink the price by that much.

But if Apple has priced its iPod touch, with its 4-inch screen and powerful A5 processor, at $299, can the Cupertino giant really come out with an iPad mini -- one that sports a 7-inch screen, bigger battery, and similar processor -- at the same price point?

Seems unlikely given the fact that the iPad mini would essentially be a scaled-up version of the iPod touch, or a scaled-down iPad.

Even if Apple dropped the starting storage capacity to 16GB, I doubt that would shave much off the price. After all, storage doesn't actually cost that much.

Apple's decision to price the iPod touch starting at $299 doesn't leave much room for the iPad mini. Would the market support a price of $350 when a full-sized iPad 2 costs $399, and the latest model only another $100? Since Apple firmly believes that its loyal customers will pay $40 for a cable or $9 for a wrist strap, then maybe people will, without question, pay whatever it says on the price tag for an iPad mini.

Given that we've not seen a single piece of hardware leak from the factories in China -- in stark comparison to all the iPhone 5 leaks -- perhaps the 7-inch iPad only exists in the minds of the pundits and analysts.

Image source: Nickolay Lamm/InventHelp, CNET.

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