The Google Nexus 7 has been out and about for months. Starting at £159, it has defined the 7in tablet. It's cheap and as useful as you make it. So, is Apple completely insane to drop a £269 price tag on its new device?
Here is the problem that seems to be little understood by Apple and its mavens: If the company simply matched the iPad mini price to the Nexus 7 price, it would be a no-brainer buy. Everyone wants an iPad and they all would simply buy it. If the iPad mini cost less than the Nexus 7, then it would not only have stolen the market but probably decimated the Nexus 7, turning it into a white elephant and making Google think twice about bringing out anything to compete with Apple. It's an age old marketing tactic. It has been used to kill off interlopers – companies that thought they could shove their way into a market. It seems to be forgotten.
Just imagine the scene if Apple had projected "$179" onto the screen during its announcement (and priced the UK model at £149). Apple stock would have rocketed and the Nexus 7 would have been dead in the market overnight. Every pundit would have gone nuts. They would all finish their articles with "I want one!"
Anyway, Apple did not match or undercut that price point. Instead, it jacked up the price as if it were immune to competition.
The real problem here is not that Apple cannot get that kind of money for a little tablet. The problem is that the price point invites comparison. Apple does not need people floating around shopping for deals. No matter the basic strengths and weaknesses of its product, now people will examine the two products closely. Why invite this sort of activity when you are the market leader?
Shoppers will ask questions like:
"Is the iPad mini worth the extra money?"
"What is the real difference between the iPad mini and the Nexus 7?"
"Which can I really afford?"
"Which one do I like better?"
"Which one looks better to me?"
"What difference does it make?"
Apple will not win all of these showdowns. And worse, there are some appealing programs that only work on Android. These would only be discovered during a comparison.
This is a loser of a situation for Apple. To make matters worse, once people start comparing the iPad mini to other 7in tablets rather than just buying from Apple, no matter what, they will continue to compare other products such as the iPhone.
The way I see this, Apple shouldn't have brought out the iPad mini unless it could beat the Nexus 7 price and kill it dead on the spot. It should have just stayed on the sidelines until users demanded a smaller iPad. I didn't notice any such demand. Steve Jobs himself never even liked the idea of a smaller iPad.
This product should have never been released except under one circumstance and one circumstance only. Knowing that Steve didn't want this product, the following scenario could have been executed, high price point and all.
To begin with, the event should have built around the fourth-generation iPad, which seemed to get overshadowed by all this. All the rumours should have been about a new iPad coming before Christmas. Some minor rumours about an iPad mini could have been mixed in. The invite should have reflected the iPad 4.
So, Apple rolls out the iPad 4 and then builds up to a second announcement: A limited run, special edition iPad mini available in stores only for the very few people who actually want one.
"This is only being released because we know that some users want and need a smaller iPad. So, we did those of you a favour and made this iPad mini. It's a premium product because it is a limited edition that will only be sold for a short time. Each unit will be numbered and only X-million will be manufactured."
In other words, use the Disney trick: "Newly remastered Sleeping Beauty! Never to be seen again!"
Nobody would complain about the price since it's a limited edition product. And if nobody buys them, Apple looks as if it was right to produce just the one batch.
Apple would have been called a marketing genius once again and the stock price would have skyrocketed.
Too late now.