Apple's Schiller defends iPad mini's price tag

SAN FRANCISCO Tue Oct 23, 2012 5:34pm EDT

The new iPad mini during is projected on a screen at an Apple event in San Jose, California October 23, 2012. REUTERS/Robert Galbraith

The new iPad mini during is projected on a screen at an Apple event in San Jose, California October 23, 2012.

Credit: Reuters/Robert Galbraith

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SAN FRANCISCO (Reuters) - Apple marketing wizard Phil Schiller defended the $329 price of the new iPad mini tablet, saying consumers will be willing to pay for quality not found in less expensive devices from rivals like Google and Amazon.

With competition growing from tablets that are smaller and less expensive than Apple's wildly popular iPads, Apple Chief Executive Tim Cook and Schiller on Tuesday took the wraps off the new 7.9-inch tablet, which essentially has most of the functions and features of the full-size iPad but in a smaller package.

While the news of the launch was welcomed by Wall Street, many analysts were concerned that the steeper-than-expected price might turn away some cost conscious consumers.

Google's Nexus 7 and Amazon's Kindle Fire HD tablets are both priced starting at $199. While the iPad mini is significantly more expensive, it is also lighter, thinner and provides more screen space than rival offerings.

Asked by Reuters whether the iPad mini's price could make it too expensive for some cost-conscious shoppers who have been attracted to the Nexus 7 and Kindle Fire, Schiller said he believes consumers will see Apple's smaller tablet as a premium product worth paying for.

"The iPad is far and away the most successful product in its category. The most affordable product we've made so far was $399 and people were choosing that over those devices," Schiller said.

"And now you can get a device that's even more affordable at $329 in this great new form, and I think a lot of customers are going to be very excited about that," Schiller said.

Amazon made inroads into the realm of 7-inch tablets last year with the launch of its Kindle Fire and has said its latest Kindle Fire HD is the best-selling product on the company's website since the device went on sale more than a month ago.

The Internet retailer is believed to sell the product close to its cost, but the Fire HD is part of Amazon's strategy to attract mobile customers to its website.

Internet advertiser Google is similarly believed to sell its Nexus 7, manufactured by Asustek, near cost.

Apple is under pressure to defend its dominant position in tablets, a market it created with the launch of the first iPad in 2010. The intensity in the marketplace was evident in Tuesday's unveiling of the iPad mini as Schiller took the unusual step of doing a side-by-side comparison of the smaller iPad and Google's Nexus 7 tablet.

"Others have tried to make tablets smaller than the iPad and they've failed miserably," Schiller said during the event. "These are not great experiences."

The launch of the iPad mini, at the California Theater in San Jose, was mostly a Schiller show with the veteran Apple executive responsible for all of its marketing and advertising strategy introducing all of the new products, including a fourth generation 10-inch iPad, a 13-inch Macbook Pro with a so-called retina screen and a new iMac.

Apple's presentations typically feature a host of executives and even some external game company executives, but Schiller on Tuesday only shared the stage with Cook, who later mingled in a crowded room as journalists and analysts jostled in a crowded room to try out the new gadgets.

Analysts have worried that challenging the likes of Amazon in smaller and less expensive tablets could hurt Apple's prized profit margins. Apple's gross margin on the full-sized iPad is between 23 percent and 32 percent for US sales.

Despite concerns that the high price tag may curb demand, analysts were still bullish of the company, which will releases its fiscal fourth-quarter results on Thursday.

"In spite of concerns about the price … we would be buyers of the stock even in front of earnings this Thursday as we do believe that customers will pay a premium for an Apple tablet," said Shebly Seyrafi, an analyst at FBN Securities.

(Reporting By Noel Randewich and Poornima Gupta; Editing by Steve Orlofsky)

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Comments (5)
I don’t want it. Just over a year ago, I bought the iPhone 4 and now IOS6 is causing it to lag and not respond to commands. I also bought an iPad 2 that I use to check the weather, facebook, and read kindle books, but there is no way I can keep pace with a business on either of those. The MacBookPro is pretty good – better than anything with Windows on it, but you better believe that if Google comes out with a good operating system…it’s BY BY to Mac. The next phone I get will not be an iPhone. Not sure which one to get, but the Samsung Galaxy looks like it can do everything this iPad mini can, plus it has a phone, which is one less thing to carry. I really thought Apple could be a little more innovative that a smaller iPad…really?!?!? That’s all you have? What’s better about the iPhone 5? A little more screen area and now the back of the phone is going to get all scratched up because of the crappy design. And then you had to change the power cord again, so I everyone has to buy the little annoying adapter to use the same plug they use on the iPad. Pull it together Apple or you are going to find yourself right back to where you were in the 90′s.

Oct 24, 2012 11:35pm EDT  --  Report as abuse
sandeep0109 wrote:
APPLE is taking all its loyal customer for one big ride .. they launch new products every 6 months now and the only new innovation they talk is some crazy new way of welding the product .. and keep repeating the retina display as a wow factor.
Tim cook was just repeating “jaw dropping”, “amazing” , “unprecidented” in the launch event.
IPAD clearly is a over priced social media device and nothing else – I would rather use a kindle for my reading and a MS surface for as my tablet + PC.
its time for all the consumers to get over the apple hype especially the media – they just glorify apple for every small thing they do.

Oct 25, 2012 1:35am EDT  --  Report as abuse
ToniCab wrote:
With that price tag I rather go with ASUS Transformer…

Oct 25, 2012 2:32am EDT  --  Report as abuse
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