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Comment by nicholassmith | Hacker News Reader

"It's going to suck the oxygen out of the $300-$500 price range for anything with a screen."

Which is very clever, they know their competitors are going for price, but now they've forced them to commit to seriously low margins. Always helpful to keep your competition struggling to make meaningful profit.

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And the best alternative to the iPad mini is well below the $300-$500 range: the N7 is in the $200-$250 range.

Yeah, I think they made a mistake here. Of course I have no idea what their margins are, but $299 looks a whole lot better than $329. Would $30 really make or break them?

[edit: math (doh!)]

$329 might not be a disadvantage. It might send a slight signal that they aren't competing on price.

The difference between $329 and $299 is $30, not $20.

Have to also keep in mind the price of the mini vs full sized ipad... it's not just dropping $20 (well, $30) per mini sold... there's a lot of nuance in the pricing and consumer perception of the cost vs value of mini vs other products (including full sized iPad...)

My sense is, and it's just my sense, is that they priced it more with cannabalization or the larger iPad's in mind and less with the competition in mind. If they had come in around $249 to $279 they could have still sent all the right signals about this being superior to the competition. However, at that price point they would have really impacted their $499 iPad. I believe Apple left a big hole for competition to thrive in because of the fear of impacting the larger iPad. Two reasons: Apple admits that the main usage for a tablet is surfing the web and checking email. A Nexus 7 does that just fine. Secondly, Nexus 7 will improve significantly from the 1st gen it is - Apple's given them plenty of breathing room to bump the specs and sell a higher end device at $299 and even $329 price. Apple had a difficult job but I sense they acted like the large incumbent they are and worried about their own shorter term margins and less on snuffing out the competition.

Yeah a 10% price difference could be a sizable chunk of their margin.

I think the idea behind pricing at ~$300 instead of $200 (as with N7 or Kindle Fire) was to separate themselves from what they want people to believe are cheap knock-offs.

I completely agree with this. This was also evident with the iPhone 5 release. When the competition (think Samsung Galaxy S3) was selling for a few dollars more, Apple didn't hesitate to bump their price to match. And, obviously, this has always been the case with every other product they've sold in the last 20 years.

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