The Digital Reader

Your Best News Source for Tablets and eReaders

The Digital Reader header image 1

A $329 iPad Mini Feels Like A $2495 1984 Macintosh

October 24th, 2012 by · 25 Comments · opinion

Apple’s Schiller defends iPad mini’s price tag

It’s obvious that the chatter revolving around a $329 price before the Mini’s introduction was a calculated leak by Apple to soften up the market for the inevitable price disappointment.

That stinks.

I don’t want to hear your bullshit spin about the Mini being a “premium” product and how the number and quality of apps matter.

That’s nothing but absolute bullshit and here’s why.

Prior to the introduction of the original iPad, everyone thought the price would be $999. After all, Apple was known for “premium products at premium pricing.”

When the $499 base price was announced, everyone was shocked.

All of you out there might have forgotten that, but I damn well haven’t.

It’s clear that when Jobs mandated the creation of the iPad, he wanted it at a certain price point. And he told Tim Cook the price he wanted to achieve and Cook made it possible by hammering on the supply chain to meet that price.

Here’s what Jobs himself said at the iPad introduction:

An amazing product. Tremendous breadth. What should we price it at?

Well, if you listen to the pundits, we want to price it at under a thousand dollars. Which is code for nine ninety-nine.

When we set out to develop the iPad, we not only had ambitious technical goals, and user interface goals, but we had a very aggressive price goal. Because we want to put this in the hands of lots of people. And just like we were able to meet or exceed our technical goals, we have met our cost goals. And I am thrilled to announce to you that the iPad pricing starts not at nine-ninety-nine …

… but at just four hundred and ninety-nine dollars. Four hundred and ninety-nine dollars.

At four hundred and ninety-nine dollars, a lot of people can afford an iPad.

I don’t see that happening here.

What I see happening here is an Apple executive suite that has forgotten the lesson of the original iPad.

Given everything the original iPad did — and the thousand of iPhone developers ready to start making apps for it — it could have been priced as a “premium” device. But Jobs didn’t do that.

Now, with the Mini, we are given all this crap about it being a “premium” product.

What utter bullshit.

That price seems to me to have been driven by Marketing.

Marketing looked at the iPod Touch for $299 and panicked about making the price of the Mini “fit.”

Steve Jobs would not have done that.

Steve Jobs would have made Cook hammer the supply chain to get the price he wanted the Mini to be — as he did with the original iPad.

And I’m convinced it would have come in below the price of the $299 iPod Touch.

And Jobs would have gotten away with that by spinning the iPod Touch as the premium product.

He would have tied the pocketability of the iPod Touch to that of the iPhone and people would have swallowed that. It would have even made perfect Jobsian sense! If you want something iPhone-like for your pocket, well, you need to pay for that.

Instead we now have the spectacle of the iPad Mini positioned as the premium product — something the iPad was never positioned as being — with a price that reflects a great deal of misguided and really suicidal corporate hubris and outright fear.

Finally, let me remind you of the original Macintosh and the targeted price Jobs wanted for that. From the Isaacson biography of Steve Jobs:

Their first substantive disagreement was over how to price the Macintosh. It had been conceived as a $1,000 machine, but Jobs’s design changes had pushed up the cost so that the plan was to sell it at $1,995. However, when Jobs and Sculley began making plans for a huge launch and marketing push, Sculley decided that they needed to charge $500 more. To him, the marketing costs were like any other production cost and needed to be factored into the price. Jobs resisted, furiously. “It will destroy everything we stand for,” he said. “I want to make this a revolution, not an effort to squeeze out profits.” Sculley said it was a simple choice: He could have the $1,995 price or he could have the marketing budget for a big launch, but not both.

“You’re not going to like this,” Jobs told Hertzfeld and the other engineers, “but Sculley is insisting that we charge $2,495 for the Mac instead of $1,995.” Indeed the engineers were horrified. Hertzfeld pointed out that they were designing the Mac for people like themselves, and overpricing it would be a “betrayal” of what they stood for. So Jobs promised them, “Don’t worry, I’m not going to let him get away with it!” But in the end, Sculley prevailed. Even twenty-five years later Jobs seethed when recalling the decision: “It’s the main reason the Macintosh sales slowed and Microsoft got to dominate the market.” The decision made him feel that he was losing control of his product and company, and this was as dangerous as making a tiger feel cornered.

Boldfaced emphasis added by me.

A $329 price for the iPad Mini is a short-circuiting of the Steve Jobs revolution.

That $329 iPad Mini price is just inexcusable and full of FAIL.

Will the Mini still sell? Hell yes. I expect it to break all records. That’s a reflection of the pent-up demand for it. But if you were to ask people what they expected it to be priced at, no one would have said $329.

Nor would Steve Jobs have said $329.

Steve Jobs was a businessman and a revolutionary.

The people running Apple today are just businessmen.

The $329 price for the iPad Mini is glaring proof of that.

Tags:

25 Comments so far ↓

  • Nate Hoffelder

    I still remember the shock of the $500 iPad. That certainly was not the premium price everyone expected.

  • Tristan

    Holy cow. Bitch and whine much?

    As easy as it is for you to say “I don’t want to hear your bullshit spin about the Mini being a “premium” product and how the number and quality of apps matter,” that doesn’t nullify the fact that it IS a premium product and that the number and quality of apps DO matter. For the vast majority of this tablet’s intended customers, anyway.

    “That $329 iPad Mini price is just inexcusable and full of FAIL.”

    In addition to being overly reactionary, you also appear to be 12 years old. This post is garbage.

  • TuuronTour

    And are you still behind your prediction that the e-ink reader will be marginalized by the iPad Mini?

  • fjtorres

    Two things to remember about the original Macintosh:
    1- It sold for $2500 at retail but $1000 to universities.
    2- The build cost was $300.

    And the second fact became common knowledge very fast because both Atari and Commodore used it as leverage to market the ST and the Amiga. Both of which sold for less than the 128 Mac.

    Also, before canonizing Jobs, remember the story of the 3rd Party Hard-Drive add-in for the 128Kb Macintosh: “When told somebody had released a 3.5″ hard drive that fit inside the Mac, Jobs (whose first love was the LISA) exclaimed; “Impossible! I made sure…”
    (The Hard Drive Mac is what finally put the LISA project out of its misery.)

    You ever see this? Jobs role wasn’t all he later pretended it was:
    http://www.cs.ucla.edu/~klinger/mac.html

    Most of Apple’s pricing culture comes from Jobs V1.0, not Scully.
    He only later (grudgingly, after failing with the Apple III, LISA, and at NeXT) came to concede that pricing products in a vacuum was a non-starter.

    And that is the trap Apple has fallen into with the Mini: they designed and priced it according to their internal needs and product line without much regard for the outside world and then went looking for jusifications for the price, instead of designing to a *rational* price point as they did with the original iPad.

    BTW, never mind the $329 entry-level mini: how’s about the 32GB Wifi Mini? Or the 64GB model?

  • Daniel

    This is way too much complaining.

    You can call the iPad mini being a premium product and it having the greatest variety of apps “bullshit”. But you calling it that doesn’t make it false. It is a superior product than competition’s and it offers the best experience variety-wise.

    Also when Steve introduced the iPad, it was priced for what it was: a big iOS device that NEEDED to reinvent an entire category. Now that the iPad is an undisputed success, as much as we don’t like it, Apple can charge whatever they want for the iPad mini. And guess what? It will sell like hotcakes and even cause supply constraints. And next year a retina model will come out and this one will cost a $100 less and will continue to sell.

    That’s the great thing about responding to people who blindly criticize Apple: They believe they know even what Steve Jobs would do or think (hint: No one does, he is DEAD), they whine and choose the Apple quotes that suits their argument and when all else fails, they start using words like “crap” and “bullshit” because their intelligence does not allow them to articulate their thoughts when angry. And when the time comes to respond to them, no one has to do anything. The market speaks for itself and reminds us that whiners are and will remain just that: whiners.

    • Xyzzy

      Are you new here? He’s a major Apple fan — what you’re seeing is a fanboy getting upset when the company he’s attached to doesn’t live up to expectations. The attachment to Steve Jobs is kind of a big sign, you know…

      People like me that don’t like Apple, don’t feel their products are premiums, and didn’t care either way for Jobs tend to attack more dispassionately on actual abilities, hardware stats, and tend to laugh at the assumption that “popular” is synonymous with “best”. Hint: Betamax & VHS disproved that one a long time ago.

      We can usually identify the hardcore Apple fanbois like you because they tend to resort to ad hominem attacks, circular logic, emotion, and other ultra-fanboy junk, invariably against somebody that dares state an opinion about the company (or any of its products) that isn’t “omg it’s teh bestest thing ever!!!!”

  • Binko Barnes

    After the iPad Mini was released yesterday my wife went ahead and ordered a 32 GB Kindle Fire HD. It cost $250. The 32 GB Mini is a laughable $429! And in return for that extra $179 you get a LOWER resolution screen on the Mini.

    Most people don’t care if there are 5,000 or 10,000 or 100,000 apps available for their device. They only want to do a few things. My wife wants to stream movies, read ebooks, check email and facebook and maybe play one or two simple games. That’s it.

    I think the iPad Mini will, in fact, be a counter-revolutionary product. The combination of high price and weak screen resolution will open the eyes of millions of consumers to the fact that Apple devices are no longer special in any way other than price.

  • monopole

    A $499 iPad was interesting because the individual components and software were relatively rare and hence the iPad was basically a “Bespoke” product. On the other hand the components for tablets are now prevalent and cheap and android is free. Pretty much the equivalent of the PC market in the mid to late 90′s.
    Any Shenzen factory can lash up the equivalent or better of the iPad mini for ~$139 retail (for example the Cube U23GT). Same for the iPhone5.
    This is the equivalent of offering the original iMac for $2,495.
    Of course, Apple is knee deep in the middle of the Innovators dilemma:
    http://chrisklein.wordpress.com/2008/10/30/apple-vs-android-modular-to-interdependent-and-back-to-modular/
    The iPad4 is overshoot, while the mini and the iPhone5 are hobbled attempts to counter low end disruption. But Apple is built around the proposition that tablets and phones are expensive with huge margins. If dirt cheap tablets take hold, Apple’s margins collapse and the cost of going it alone on hardware and software development becomes prohibitive.
    Currently, Apple is getting by on momentum and brand loyalty, but is on the inflection point with 10″ tablets and past it on phones.
    They could steal a march by getting serious on ubiquitous computing or TV. But Jobs systematically eliminated any real successors and left a corporation of only minions.

    • fjtorres

      Ubiquitous computing requires meaningful cloud services and cross-platform apps; TV requires a significant living room presence in STBs and services. Apple is way behind in both areas.

  • fjtorres

    BTW, I’ll readily concede the iPad mini has the most premium of premium cases. That light and stiff aluminum unibody is really cool. Unfortunately the case surrounds decidedly meh-ishly uncool electronics. I can’t see paying a $200 premium for that casing.

  • cookie

    I was wondering why Cane hadn’t weighed in earlier in the comments. It was because he was busy writing.

  • Ani

    Are you communicating with the dead now? Please, a lot less “would” supposition and more substantial reasoning is called for in your musings.

  • Robert

    I know what you mean friend, though I think there more too it, Ipod Touch has almost out lived there life cycle, same goes with most the ipod lineup, by next year I can see them going to a smaller class of mobile devices,

    Ipad Mini; by next year will be replacing the Ipod Touch, and Ipad, it smaller lighter, cheaper, for business, personal, education.

    where as Ipad Nano will replace the Ipod Touch and Classic, by increasing the Memory to 64 or 128 and adding a camera to be able to take photos and videos on the go,

    Will it happen who knows business men yes, but most higher up within Apple were groomed by Jobs and NeXT I think the only problem I see right now is there moving trying to growing to fast, the only two left of visionaries is Bill Gates and Steve Wozniak and Don’t think that either would come in to try to help Apple with out Steve Jobs around this time around I guess will tell to see if or can they get there groove in the tech world without the tech visionaries there to guide them.

    P.S. yes I will be getting a Ipad Mini, for the simple fact to be my travel companion :)

    • Xyzzy

      Man, you should type less often on your iDevice… I had to re-read it three times in parts because the odd punctuation & wording (like “who knows business men yes”) made it seemingly nonsensical at points.

      (I normally don’t say anything, but rules regarding punctuation and extended run-on sentences are fairly standard across Euro-descent languages.)

      • Xyzzy

        Oops… To clarify: I normally don’t say anything about difficult-to-decipher writing as it might be due to the person not having English as a primary language.

        • Robert

          in reality it me trying to type on a 3 inch android phones screen major fail; since it not easy to do with large hands but without internet last night all I had was my phone.

    • Tim Gray

      The iPod Touch is a games machine and personal organiser. Making it smaller would stop it working.

  • Sweetpea

    From a Dutch review:

    “… did the price of 329 euro make sure that the high end feeling of the Ipad Mini is maintained.”

    Wait, what? So, a tablet is high end if the price is high end?

    The price of 329 euro makes me feel like Apple simply wants to make fools of the buyers. You get a resolution which is the same as my 7″ tablet (taken into account the difference between 4:3 and 16:9), which is almost 2 years old, and has no expendable storage?

    “Schiller said he believes consumers will see Apple’s smaller tablet as a premium product worth paying for.”

    Some consumers will see Apple’s smaller tablet as the product they need as it has an Apple logo on it, he means…

    Had this thing been priced below 250 euro, it might have been a nice product, but at this price, no thank you. It only confirmed my believe that the true Apple fan will buy anything with the Apple logo on it, no matter the price.

  • willem

    I can’t decide whether channeling a (somewhat fictional) Steve Jobs is amusing, idiosyncratic, or just plain worrying.

    One notices that Mr Cane does not actually tell us where he thinks the Mini should have been priced at.

    For a contrary viewpoint, see Felix Salmon:
    http://seekingalpha.com/article/947511-why-apple-doesn-t-care-about-its-competition

    • fjtorres

      Well, the whole point of the Mini’s price is to remind everybody that Apple is Apple and they *don’t* care about any competition.
      They *own* the tablet market and they own their customers, who will pay whatever Apple charges and be grateful it isn’t higher. (At least for now.)

      • willem

        Well, that assumes Apple has no strategy whatsoever other than pure cupidity. I think the strategy outlined by Phil Schiller at
        http://www.splatf.com/2012/10/ipad-mini-pricing/
        makes sense.

        I’m just baffled by some of the reactions. The brand may be Apple, but their margin is all in the hardware. Given that $199 was never going to happen and an intro of $250 was a long shot. Perhaps the only real surprise is that they did not start at $299

  • Luke

    While I agree with you on the outstandingly low price of the iPad at launch, the iPad mini has the luxury of picking any price point below the cost of the iPad. It is certainly much higher than the $199 price point of the Android tablets, which is expected because it’s a better quality device. $329 hurts, but it will sell just fine as it’s still the cheaper alternative to the iPad.

  • Thomas

    Based on the pricing, I get the impression that the Mini’s target audience isn’t first time tablet buyers. It costs 65 percent more than the equivalent Android device. It seems to me Apple is expecting to sell this mostly to current Apple users, Ipod users who want a bigger screen and Ipad users who want a smaller one. This is more about preventing current users from leaving Apple’s ecosystem because of form factor than in drawing in new users.

  • Xyzzy

    Here is the original article I was referring to in my earlier comment:
    The iPad Mini reveals Tim Cook has done a better job than Steve Jobs.

    (I admit that I’m really hoping that your reaction will be posted as another blog post… People questioning major often-worshipped companies is a good thing, and you can always cite your statements regarding SJ by referencing his autobiography.)

Leave a Comment