Apple is gearing up for the expected launch of the iPad mini in October—I bet on an October 2 release date. Industry sources from Taiwan report its supply volume will reach about 4 million units per month, starting September. But my main question is: how much will the 7.85-inch iPad cost?
The 7-inch tablet market currently looks like this: Amazon’ Kindle Fire is marketed for $199, as is the recently released Google Nexus, while the Samsung Galaxy Tab 7.0 plus starts at $250. An entry level new iPad costs $499, while the iPad 2 is $399. This leads us to the next question: how much will Apple charge for the iPad Mini?
Looking at the bill of materials (estimated and) provided by IHS Suppli: BOM of the iPad 2 amounts to $245.10, while the Wi-Fi version of the new iPad stands at $316.05. Considering that the iPad Mini is about 20% smaller than the original iPad, my first thought was that the iPad mini’s BOM will amount a fifth less of the aforementioned prices: $196.08 or $252.84.
While it looks like a reasonable argument, this doesn’t give exactly the full picture, although $196 sounds pretty credible compared to the Google Nexus 7 BOM, which amounts to $159.25 for the 8 GB model. If Apple decides to supply an 8 GB version of the iPad (which I think is very likely) then it could cut additional costs. Compared to the BOM, the Amazon Kindle Fire amounts ($201.70), Apple’s gross margins will be higher than expected if the company will price the iPad mini at $300.
The success of the Google Nexus 7 and the initial success of the Kindle Fire emphasizes once again that the market has cropped for a smaller tablet that we can hold in one hand, while the other hand is used for browsing content. The aggressive pricing of the Android-running tablets have achieved their purpose: they targeted low end users, who were after purchasing a tablet computer. An iPad mini priced at $300 will still be able to compete with these two market players, considering the power of the Apple brand, and the content users will have their door through the smaller version of the most popular tablet.Contact Us for News Tips, Corrections and Feedback