Why a Cheaper iPad Mini is Likely
The iPad mini 2 isn’t the only iPad we may see this fall. Rumors of a cheaper iPad mini flowed throughout the last year and the iPhone 5c shows Apple’s willingness to use older hardware in a new colorful shell to appeal to a new user base and better compete with mid-range Android devices.
With an iPad event scheduled for October 22nd, the time is ripe for new iPad models. We fully expect to see an iPad 5 with a smaller iPad mini design and an iPad mini 2 with a Retina Display arrive at the event, but there is also a possibility that Apple is planning a cheaper iPad mini to join the lineup.
Apple’s product lineup grew in 2012 and 2013 to accommodate multiple price points. The iPad 2 stayed on when the iPad with Retina arrived and again when the iPad 4 arrived to offer a cheaper device. The iPod touch 16GB arrived without a camera to offer a more attractive price. Most recently the iPhone 5c release delivered a cheaper iPhone that consumers view as new thanks to a colorful plastic shell, but it actually uses most of the same tech as the iPhone 5. Retailers are already using the iPhone 5c as a cheap iPhone with prices dropping as low as $45 just weeks after release.
Earlier this year Apple CEO Tim Cook shared Apple’s plans to offer more affordable products, but cautioned the company is not setting out to make cheap gadgets telling attendees at the Goldman Sachs Technology and Internet conference,
“our north star is great products … We wouldn’t do anything we considered a cheap product. That said we have done things to appeal to people more price sensitive.”
Cook explains that Apple doesn’t look for ways to “cheapen” a product, but instead to deliver an Apple experience in a different concept.
Cook’s vision and Apple’s actions in the last two years line up with rumors of a cheaper iPad mini which could help Apple better compete with the Nexus 7 and Kindle Fire, just like the iPhone 5c is helping Apple take on cheap Android phones.
The iPad mini currently starts at $329 for a 16GB WiFi only model, though Apple sells refurbished units for as low as $279. Before the iPad mini launched in 2012, consumers believed a price below $300 would be the best fit according to a survey by PriceGrabber. A separate survey from TechBargains delivered similar results.
Up until a month ago popular opinion suggested Apple would drop the price of the current iPad mini without a Retina Display to become a cheaper iPad mini, but with the iPhone 5c strategy in play there is case for an iPad mini c style device.
Rumors already point to Apple testing an iPad mini with an Apple A6 processor and no Retina Display, which would be a modest upgrade for the iPad mini. This device is not likely the iPad mini 2, which rumors suggest will use an Apple A7 processor and a Retina Display.
Instead of using the same aluminum body as the iPad mini 2, a cheaper iPad mini could arrive in the same colorful plastic hues as the iPhone 5c, offering a slightly more durable device and cost savings for Apple.
According to industry estimates the iPhone 5c costs 19% less to make than the iPhone 5, despite using nearly identical internals. By opting for last year’s internals and a plastic design Apple’s cost to manufacture the iPhone 5c drops $33, or about 20%.
Assuming a cheaper iPad mini with a plastic body and an older A6 processor would deliver similar price savings, the cost to make a cheaper iPad mini could drop to $153. Apple’s markup on the iPad mini is 75%, which would put a cheaper iPad mini at an odd price, but a 65% markup could make a cheap iPad mini $250 at retail. These numbers assume costs mimic the iPhone, so there could be some wiggle room here.
If a colorful cheap iPad mini with a plastic body arrives at $249 running iOS 7 and offering access to the large catalog of tablet apps on iOS the fight with the Nexus 7 becomes incredibly fierce with a $20 price difference. Like the iPhone 5c this does not arrive as a cheap iPad mini, but as the colorful option.
In this example, the current iPad mini goes the way of the iPad 3 and the iPhone 5, hitting clearance racks at retailers before dropping off Apple’s website to make room for a slightly newer, more affordable iPad mini with color options.