Why the leaked iPad mini prices are most likely wrong

Why the leaked iPad mini prices are most likely wrong

Summary: Will the iPad mini start at a very competitive €249 ($320)? Given that this is close to what Amazon sells its Kindle Fire HD tablet for, and at this price it's not making a profit on sales, I have doubts.

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TOPICS: Apple, Amazon, iPad, Tablets
47

Over the weekend, a screenshot leaked that allegedly showed Apple's pricing structure for the iPad mini. While the prices seem compelling, they are probably wrong.

Here's why.

Let's take the 8GB Wi-Fi model. According to the leaked screenshot, this new iPad will retail for €249, or around $320. Seems like compelling price, but that price converted to dollars is only $6 more than Amazon's 16GB 8.9-inch Kindle Fire HD tablet. The same Kindle Fire HD tablet that Amazon admitted to making no profit on

The storage capacity doesn't make much difference to the price. The difference between 8GB and 16GB is going to be less than $10.

Electronics sold in the European Union are subject to high taxes -- somewhere in the region of 20 percent -- which means that the €249 should be closer to €200 excluding taxes, or about $260. This is almost $60 less than what Amazon sells the Kindle Fire HD for -- a device that makes Amazon no money. Amazon even went as far as to add advertising to its tablet in order to shave the price down to $299, which goes to show just how tight the margins actually are.

Apple devices usually command quite a healthy profit margin. Recent Apple v. Samsung court filings showed that the iPhone has a profit margin of between 23 percent and 32 percent. Given this, it's hard to see Apple selling an iPad mini for much less than $399, unless it is putting the squeeze on profit margins.

Has Apple figured out how to make an iPad cheaper than Amazon can make a Kindle Fire HD? I doubt it. This means that the leaked prices are out, possibly by about $80.

Topics: Apple, Amazon, iPad, Tablets

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47 comments
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  • This is just how Apple preannounces their stuff

    They put out these rumors on purpose to gauge reaction. I know everyone has bought into the "Apple doesn't announce anything until they are ready to order" smokescreen that Apple has put out but Apple does preannounce things months before they are ready. The iPad Mini is just another in a long line of preannouncements with no release date and no pricing, things we are constantly told is "bad" when other companies do it.
    toddbottom3
    • So true!

      "no release date and no pricing, things we are constantly told is "bad" when other companies do it"
      ninjacut
      • What announcement

        Can someone provide me a link to Apple's "official" announcement of the iPad Mini?
        jamboy34
    • Occam's Razor

      I don't think Apple has much to gain by seeding the rumor mill with potential confusion. With so many retailers and suppliers involved the source of the more 'reliable' rumors and leaks is probably just the obvious; from those third parties involved in the manufacturing, distributing and selling of the products.
      edelbrp
    • Get a life or at least a job

      You got way to much time on your hands.
      GoPower
      • At least sean connery gave a counter point

        Sure, it was a counter point to an argument that I never made but hey, I at least give the little guy credit for trying.

        Please make sure to come back when you can come up with something better than a 1st grader's "yeah, well, you are a poopy head".
        toddbottom3
    • We can do anything...

      we are apple..!!!!!

      The Kings of the Universe and you the rest:

      NOTHING
      dkaparunakis@...
  • Proofreading

    Lost art in the rush to get the news out before anyone else.
    Kevin Heckeler
  • What?

    Will the iPad mini start at a very competitive €249 ($320)? Given that this is close to what Amazon sells its Kindle Fire HD tablet for. The Kindle HD is $199, how is this close to $320?
    pearjam21
    • Google as well

      ...Or the Google Nexus 7(which is a bigger competitor in my opinion), which is $199(8GB)-$249(16GB).
      mcever
  • You are also wrong.

    $399 isn't going to sell many tablets. Why pay $399 when you can pay $499 for the bigger one?
    jaredheath
    • or 449 if you know internet.

      n/t
      Ram U
    • I'd pay $499 or more...

      I'd pay $499 or more for a better smaller one.

      Bigger does not mean better, and some people actually want it to be smaller. Too many people assume no one wants a smaller one, they just want a cheaper one... which isn't true.
      doh123
      • Exactly

        That's true look at how many people are paying top dollar to buy a smaller iPhone5. Some people want a smaller screen for whatever use they have in mind. Some people want a larger screen. I have a 7" tablet and I really like the size of it. It's easy to take around with you everywhere. If I have a larger tablet I would hesitate to take it with me most times.
        alawishis
  • uhm

    dont forget that the ipad mini is most likely going to be the combination of ipad2 and iphone parts. also everyone knows that apple sells its product at 2x the cost so they dont loose any money. if it costs them 329 to make its going to go on SALE for 658.00 and that is going to be "Deal"
    Xyberviri
    • How about getting your facts straight, first?

      Or are you claiming you know more than the author--who clearly stated that Apple's profits are between 20% and 30%, not 100%.
      DWFields
  • That's the problem

    This is part of the problem with the tablet market. They are not necessarily cheap to produce, but consumers have a hard time justifying paying that much for them. Having grown immune to the concept of a flat device (i.e. smartphone) that includes a touchscreen, no keyboard and mouse, and has some, but not all of the capabilities of the familiar desktop/laptop, many consumers see tablets as more convenient but dumbed-down computers. So the argument becomes one in which they justify price with convenience, and if convenience isn't a huge factor, the price doesn't make sense. Why spend $599 on a tablet that may still require you to buy a computer when you can spend $599 on a full featured laptop.

    This certainly is not the feeling of all consumers, as tablets are rapidly building purpose in our lives where we never saw if before, but it's easier to take that "chance" at $199 or even $299. But after that, a justification is needed.

    Apple's products have been more immune to this concept, as they continue to sell in very high numbers even with the high price. Part of it is likely user experience. Part of it is an "image" factor (they're cool and all my friends have one). Part of it is wide development efforts that make a useful product for more people. But when it come to the 7 inch and 10 inch models, the 7 inch demand is from a niche group of consumers (such as myself) that specifically want a 7 inch because of it's weight and portability. If the iPad Mini is only slightly cheaper than the full-size iPad, it doesn't make sense for me. I've had my eye on a Samsung Galaxy Tab 2 7 inch for awhile, and the price just dropped to $199. I think the price of the iPad Mini is going to have to be better than $349 to really be a game-changer.
    pky254
    • You're re-iterating 30-month old arguments

      You're saying the same things that the naysayers used when the iPad was first announced, and users quite clearly proved every one of those pundits wrong.

      What the tablet offers is mobile computing in a form factor that no other product offers--including laptops and netbooks. It offers a convenience of using the device in your hands, no matter where you are (preferably not while you're driving) without having to set it down to type on it. The convenience of using it in the car, on the train, in the restaurant, wherever--even walking, means that you don't have to stop, block traffic or take up a bigger table just to respond to an email (as an example).

      Convenience has a price. Quality has a price. Offering both? I don't expect an 'iPad mini' (and I still don't expect one) to come in less than $350.
      DWFields
      • I agree with you DWFields

        "What the tablet offers is mobile computing in a form factor that no other product offers--including laptops and netbooks."

        Absolutely right. The difference is that you add a keyboard to an iPad and you add 5% productivity for those times when you need it. Add a keyboard to a Windows 8 tablet and you add 100% productivity for those times when you need it.

        "Convenience has a price. Quality has a price."

        Again, this is absolutely correct which is why I'm happy to spend more for a Windows 8 tablet. Convenience has a price. Quality has a price. Productivity has a price. iPads are cheap compared to Windows 8 tablets but you get what you pay for.
        toddbottom3
        • I can't wait for the Windows 8 tablets to come out

          When they do, Toddy, I hope you get two of them. Then be so satisfied by your brilliance that you never come back to troll on these iOS topics again. But then again, when you do come back, I will have proof that Windows 8/RT tablets suck rocks.
          ssaha