iPad mini pricing, fourth-generation iPads take some by surprise

The iPad mini is noticeably more expensive than the comparably sized tablets that many see as its main competition

Even though the unveiling of a smaller version of the iPad was widely anticipated heading into Tuesday's media event, Apple still managed to surprise more than a few people with the iPad mini--though perhaps in ways that not everyone was hoping for.

First, there was the iPad mini's price tag. Starting at $329 for a 16GB model, the iPad mini is noticeably more expensive than the comparably sized tablets that many see as its main competition. More surprisingly, Apple didn't just introduce a smaller iPad on Tuesday; it also rolled out a new generation of full-sized iPads a mere six months after its last iPad release.

As surprising as these decision may look from the outside, though, analysts say there's a method to Apple's move.

The price is right?

Take that iPad mini price tag. At $329, the 7.9-inch tablet costs only $70 less than a 10-inch iPad 2 with similar specs (and that has also been widely available since 2011). Competing 7-inch tablets such as Google's Nexus 7 and Amazon's Kindle Fire HD both retail for $199.

Prior to its Tuesday unveiling, many analysts expected the iPad mini to cost less than $300--an important threshold for consumers, according to NPD Group analyst Stephen Baker. "Psychologically, there's a big difference between being $299 and $329," he said.

Still, just carrying the Apple logo gives the mini a big edge when it lands on retail shelves on November 2. Tim Bajarin, president of technology analysis firm Creative Strategies, expects the iPad mini to "become immediately the gold standard in 7-inch tablets." Bajarin is looking for the mini to ascend to the top of the one-handed tablet heap by Christmas.

Bajarin extolled the virtues of the iPad compared to its competitors, like the Kindle Fire HD, and says consumers would likely shell out $80 more for an entry-level iPad mini rather than the $249 Kindle Fire HD, even if that latter tablet offers twice the storage.

"You get Apple's elegant design, their 275,000 apps that work perfectly on the iPad Mini, and Apple's stellar service and support," Bajarin said.

Bajarin also expects future generations of the iPad mini to come in at a lower price. Indeed, in some instances, Apple has lowered the price on subsequent releases of its mobile devices. The original iPod came in at $399 for a 5GB version of the music player; capacities soon rose and prices soon fell in the ensuing years. Likewise, the first iPhone started at $499; a year later, Apple slashed the starting price to $199 for an iPhone 3G (though subsidies from wireless carriers were responsible for that price drop).

Even if the iPad mini didn't meet pricing expectations, NPD Group's Baker notes that Apple usually has an uncanny sense for how to price new products. "Apple's history of picking the right price is pretty good," he said. "Analysts and watchers are going to pick apart the $329, but I think we need to let the consumer make that decision."

A new iPad generation

The sped-up refresh cycle for the rest of the iPad line was the other hot topic to come out of Apple's Tuesday announcements. The third-generation iPad debuted in March with Retina display is now off the market after the company unveiled the fourth-generation iPad with the Apple A6X chip, a FaceTime HD front-facing camera, and Lightning port. Prior to Tuesday's announcement, Apple typically waited a year in between iPad releases.

Apple's decision to produce a new iPad just months after releasing an upgraded tablet inspired angry tweets and disgruntled blog posts, but Baker says that's the nature of tech.

"I don't know why anyone would think [Apple was] under any obligation to not update a product for some period of time," Baker says. "Their only obligation is when they think the product needs an update, it's time to update it."

The third-generation iPad has an A5X chip, which is slower than the iPhone 5's A6 chip and half as fast as the fourth iPad's A6X (with half the graphics performance, too). Baker says moving over to a new chip and replacing the 30-pin dock connector with the Lightning port standard likely contributed to Apple's decision to opt for a quick upgrade turnaround.

Aggrieved third-generation iPad owners aren't without options. Apple's retail policies allow for returns 14 days after purchase. though some media reports note that select Apple Stores are taking back third-generation iPads bought within the last 30 days if the tablets show no signs of wear-and-tear.

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Caitlin McGarry

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