Why Apple’s (AAPL) iPad Mini Costs So Much: Report

iPad Mini’s $329 starting price tag, which is a full $130 higher than the direct competition, was a disappointment for Apple (AAPL) fans as well as many consumers who hoped Apple would price the 7.9-inch 16GB gadget somewhere between $249 and $299 to stay competitive.

Apple marketing chief Phil Schiller defended the price and rejected suggestions the new iPad is too expensive to compete with rivals products like Google (GOOG) Nexus 7 and Amazon (AMZN)’s Kindle Fire series, saying consumers will pay for a quality product.

Schiller is right. Even at $329 Apple’s new diminutive tablet is expected to be hugely popular and will probably blow its rivals out of the water, but the real reason why Apple decided to put such a high price tag on the iPad Mini might have a lot more to do, at least for the time-being, with problems manufacturing the gadget’s touch screen.

According to Siu Han and Alex Wolfgram at DigiTimes, Apple can’t get enough 7.9-inch screens for the new iPad Mini, and the ones it can get are pricey.

“The $329 price tag for Apple’s iPad Mini is largely due to low yield rates for the product’s GF2 (DITO film) touch screen technology,” DigiTimes says in its report, adding “the DITO film sensor is having mass production issues, which has been a big contributor to why the device is approximately 40-50% more expensive compared to other 7-inch tablets that have OGS or G/G structures.”

Digitimes also reports that according to industry sources, the GF2 iPad Mini touch screen modules are only about $5 cheaper that those on the 9.7-inch model iPads. The lower margins on the iPad Mini, which  at 7.9 inches, it’s as thin as a pencil and lighter than a pad of paper, could explain Apple’s forced decision to price the latest iPad higher than expected. I say ‘forced’ because by aggressively pricing its new product higher, Cupertino is actually protecting its profit margin by trying to control demand.

In their report Digitimes also claims that the iPad 2 orders have a visibility until as late as the first quarter of fiscal 2013, thanks to the device maintaining steady sales.

4 Comments on Why Apple’s (AAPL) iPad Mini Costs So Much: Report

  1. It’s a shame that Apple has to explain why it’s tablets cost more. It’s not as though consumers are forced to buy Apple products. If a consumer can’t afford the extra cost of an Apple tablet, they’ll just buy another tablet that’s cheaper. Apple is getting a bit carried away with using technology that’s somewhat advanced. Not just because it cost more, but Apple continually runs up against yield limitations which is killing the company.

    The pundits always say that Apple doesn’t innovate, so does it even make sense for Apple to produce products with new and untested manufacturing techniques. No one seems to understand or appreciate Apple’s risks. Maybe Apple should just stay with high yield technology in order to keep production rates high and costs lower. Samsung is able to produce twice as many smartphones as Apple so they don’t seem to have any production problems at all. Many consumers seem to like Android smartphones, so they must be pretty decent devices. It’s likely most consumers can’t tell the difference of marginally better technology and will settle for less. Apple seems to be cutting its own throat. Wall Street seems to prefer companies that produce marginal products with lower cost and less quality. High unit sales are all that matter to Wall Street and Apple can’t meet those requirements.

  2. You forget that with the iPad Mini’s price, it fits right in the line up:

    1. iPod Touch $299
    2. iPad Mini $329
    3. iPad 2 $399.

  3. Is it shocking or disappointing when a Honda is priced more than a comparable Kia? The assumption that the iPad Mini and the Nexus 7 are worth the same is insanely ignorant of supply chain reality AND market reality.

  4. is a very fantastic and strong reply to other costly tablets companies. Most of tablet companies sales their tablets with high margin. All costumers like to purchase apple tablets with low of cost…

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