9to5mac has reported that the iPad mini’s pricing in the US might start from $329. Now, that pricing doesn’t seem to resonate with its name. You would say that Apple is destroying its market by not placing the iPad Mini on a par with its suposed competition — Amazon Kindle Fire HD and Google Nexus 7. Both, a 7-inch tablet and priced way below the rumored iPad Mini price. But here’s why it makes sense:
- Scitovsky, T in his “The Review of Economic Studies” discussed the pricing and public perception about the product in “Some Consequences of the Habit of Judging Quality by Price”. The study claims that people assume that the more expensive product is of better quality. And mind you, this study was done in 1945. There have been numerous such studies that discuss similar phenomenon.
Apple is launching the iPad Mini only to remove its competition in the 7-inch tablet market, which Android seems to rule. Samsung has experimented with every kind of tablet screen size from 5-inch to 5.5-inch to 7-inch to 8.9-inch to 10.1-inch but 7-inch tablet that’s not from Apple made sense to consumers. Naturally, Apple would like to dominate there as well before Android grows any foothold.
- Secondly, Amazon and Google, both, do not make any profit from the hardware — Kindle Fire HD or Nexus 7 respectively. Amazon CEO, Jeff Bezoz has famously said, “We want to make money when people use our devices, not when people buy our devices”. It’s similar with Google — they make money from their services or when people submit search queries on Nexus 7.
However, Apple does not make money from service but purely by selling hardware.
It makes complete sense for Apple to price iPad Mini at a premium cost. And people would still line up for the device.
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