The iPad Mini's Killer Feature = Price

Consumers looking for a tablet computer this holiday season will have plenty of great choices. Microsoft has its Surface RT tablets ready for pre-order, there are new Kindle Fires from Amazon, and Google’s Nexus 7 tablet leads a wide variety of quality Android options. And the big dog of the tablet market is about to enter the fray yet again, as Apple seems about to unleash a brand new - and smaller - iPad to the market. Which ones will consumers flock to? Apart from the already-successful full-size iPad, the answer, unsurprisingly, will likely have a lot to do with price.

All Tablets Are Tweeners

The tablet market is different from that of other gadgets. Smartphones, for the most part, vary little on price and typically range between free and $199 (on a carrier contract). Consumers seem willing to pay top dollar for a computer they think they absolutely need to be productive. Tablets are different while many people believe they need a mobile phone and a computer to meet their personal and business goals, a tablet is more of a “not necessary, but nice to have” type of device. 

The reality of the tablet as a tweener is what makes price so important in the purchase decision. Apple set themarket standard with the original iPad starting at $499. Every other tablet to hit the market since has had,  to react to that price point in one way or another. Some competitors failed, such as Motorola and Samsung, by pricing the Xoom and Tab 10.1 slates too high. Others, such as Amazon’s Kindle Fire and Google’s Nexus 7, competed by shrinking the screen size and pricing aggressively at $199. When it comes to battling the iPad, the competition cannot bet on superior hardware or user experience because, rightly or wrongly, Apple is perceived to be the clear leader on those fronts.

Price Is The Key

Analytics company comScore, quarterly TabLens research bears this out. Near 46.3% of iPad owners in comScore’s survey make $100,000 or more. In comparison, only 32.5% of Android tablet owners  and 33.3% of Kindle Fire owners make that much. (Note, the data is from August, before the release of the newest generation of Kindle Fires.) 40.4% of Android tablet owners and 42.2% of Kindle Fire owners make between $25,000 and $75,000. Only 31.6% of iPad owners fall within that income range. See the chart below for more detail:

If as now seems inevitable, Apple is truly going to announce an iPad “Mini” next week, the price point in relation to the competition is going to be important. The lowest Apple could conceivably go would be to match the $199 price of the Nexus 7 and Kindle Fire. Rumors say that the starting price for the Mini will either start at $250 or $299, which some analysts think is too high if Apple truly wants to compete in the smaller form factor tablet market.

If Apple can price the Mini competitively, it could create a perfect storm for market domination. According to comScore, in addition to price, the other top consideration for tablet buyers is what kinds of apps are available. As of July this year there were about 250,000 iPad-specific apps. Exactly how those translate to the supposed 7.85-inch dimensions of the Mini remains to be seen, as does how the Mini will use iPhone apps . But any way you slice it, Apple’s iOS has the most tablet-specific apps of any of the mobile operating systems.

Then, of course, there is also the iPuppies Effect, where millions of people seem willing to buy anything and everything that Apple makes - just because Apple makes it. The iPad Mini should sell well on the consumer market for that reason alone. 

How low does Apple have to go to make a killing with the iPad Mini? Share your predictions in the comments.