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The release of an iPad mini in time for the xmas present-fest seems to be a forgone conclusion and no amount of having my fingers in my ears singing la la la la la (insert own tune please) will make it go away.
This is not because I don't want Apple release the non-retina 7.85-inch screen (176 PPI -Pixels Per Inch by my back of a matchbook calculation) mini but because I cannot work out what Apple will charge for the device.
Tim Cook has probably made many decisions that Steve Jobs would not have made and, just after the anniversary of his death, the comparisons have been coming thick and fast. But what Cook will do with the price of the mini could define what sort of company Apple will become.
Let me explain.
Of Kindles, Jeff Bezos of Amazon has said that they don't expect to make money on the hardware but only on the content you buy. Very charitable of them. On the other hand Apple clearly make money on the hardware you buy, and then also on the content. Cake and eat it.
Apple's iPad is already walking away with the real tablet market and everyone who owns one seems to be satisfied however Amazon's Kindle is extremely popular in the slightly different ebook market because of two elements: price and size. They start at around £90 with 6 inch screens (167 PPI for a basic 5th Gen. unit) allowing users to shove a Kindle in a pocket rather than needing a bag.
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The iPad mini is about to dispense with the size problem. It is beloved that the iPad mini will have a 4.5:3 aspect ratio (same as the iPhone 4 rather than the iPad's 4:3 ratio) at 1152×768 pixels. Thanks to Pythagoras this gave me a PPI of 176. Much lower than the 3rd Gen. iPad at 264 PPI or iPhone 4/4S/5 at 326 PPI. However the iPad 2 has a PPI of only 132 and I am very happy with its display.
So what about the price and cost?
The BOM (Bill Of Materials) plus manufacturing of the iPad 2 at launch was about £215 and the iPad 3 was about £240. The iPad mini will not have a retina display and the battery may be slightly smaller but the rest of the costs don't scale down much just because the physical size reduces.
So lets say that the mini will cost £125-150 for arguments sake. What are Tim's choices?
Compete directly with the Kindle by using the mini as a loss leader. Apple would have to subsidise each device by around £50 when they just don't need to.
Sell at cost. This is what Amazon do and if Apple copy them it would be the single greatest change in Apple's direction since Cook took over. But still, Apple don't need to sell at cost.
Take £50 profit and run! Sell at £200 to get an Apple device into everyone's hands. I kind of like this.
Price at double cost. This is what Apple do. This would leave us with a mini that is priced between £250 and £300 where there is a gap in the market. The additional price over a Kindle is easily justified because you are buying so much more than an Ebook reader so long as battery life is good enough.
So…
Does Apple need another premium product at a premium price? No. It needs a product for the rest of the market. The people who have been put off by higher prices and who are not sure what use they would have for an iPad. People who want an Ebook reader that fits in a pocket but cannot or will not buy Amazon or Android (remember that we in the UK don't have the Kindle Fire yet -25th Oct- and the Android tablets available right now still don't have the polish of iOS 6). A unit for a husband or wife whose spouse had an Apple device, apps, books and movies all ready to go. Share the login and share the love.
If Apple can get the mini out as near to £200 as possible then they will wipe the floor with Amazon and all the Android tablets this Christmas. At £250 they might just retain their margins and still deliver a fantastically priced device. At £300 it's just business as usual.
I'm sure we don't have long to wait to find out.