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.
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.