All we seem to have heard since Tuesday’s Apple event is moaning about the price of the new iPad mini. A starting price of £269 it is way too expensive, so runs the common theme. Apple should be competing directly on price with Google and Amazom is another groove in the well-worn record. They are all wrong and the sales figures for the iPad will prove this.
Apple has never needed to compete solely on price. It is a premium brand, providing well-engineered and beautiful devices backed by a sound, safe eco-system and a comprehensive after-sales and retail network. Amazon and Android may fight one another to the bottom of the market, but Apple can and should remain aloof.
There is room in any market for different price levels and consumers understand this better than some commentators. Who, for instance, would suggest that Mercedes or BMW are wrong not to price their cars to compete directly with Hyundai or, even, Ford? Why can Leica charge £5,000 for a camera that can be compared with one costing £1,000? The answer is that consumers are not as daft as tech writers would have us believe. They weigh up all the pros and cons and will pay more if they think they are getting a better overall deal.
Quite apart from WYSIWG at point of sale, Apple products command an enviable resale value. Just check out the secondhand market and see how much you can still get for an iPhone 3G or the first generation iPad. This strong resale market dramatically reduces the cost of ownership and consumers are bright enough to understand this. Try selling a three-year-old Kindle Fire or Android tablet and see what you get.
When Apple introduces a £149 iPad stockholders would be well advised to run for the exit. Thankfully, that time has not yet come.
by Mike Evans, 25 October 2012