Can a $329 Apple iPad Mini compete in the bargain tablet market?

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It’s real. Finally.

Yesterday, Apple finally pulled back the curtain and revealed the hotly rumored, and highly anticipated iPad Mini. The leaks and rumors were so accurate, though, that Apple had little new to add. It’s a smaller version of the iPad that will be available starting November 2 at prices that start at $329 for a 16GB Wi-Fi only model.

My money was on a starting price of $199. Initially, I predicted $249, but after I heard predictions it would be $329, I assumed that would be for the 4G-equipped based model—which would, of course, be available for $199. In my mind, the $199 price tag made sense relative to the rest of the 7-inch tablet market, and the cellular option has always added $130 to the price of an iPad, which would make a 4G iPad Mini $329.

At $329, it's too expensive to compete head-to-head with the rest of the 7-inch tablets.

So, $329 was a bit of a sticker shock. The 4G option still costs an additional $130, so the 16GB 4G iPad Mini is $459. At $199, the Apple iPad Mini would have been 7-inch tablet genocide. No competitors would be left standing. At $249—another popular 7-inch tablet price point—the Apple iPad Mini would be aggressively priced, and still crush most competitors. Even at $299, the Apple iPad Mini would almost be a no-brainer for someone looking for a smaller tablet option.

That extra $30 makes a huge psychological difference, and places the iPad Mini in a sort of class of it’s own—a cheaper alternative to the iPad, that’s still enough of a premium compared with 7-inch tablet rivals that you almost can’t compare them directly. It’s like Apple’s way of subtly letting customers know that this isn’t “another 7-inch tablet”—it’s an iPad.

The question is, how will that work out in the real world? A business considering purchasing ten iPads at $499 each can instead acquire 15 iPad Minis for the same money. However, businesses willing to consider the smaller display might then also consider a Samsung Galaxy Tab 2 7.0, or a Lenovo IdeaPad A2109. The Google Nexus 7 has been a huge success, and according to reports from The Verge it seems that a 32GB Google Nexus will soon be available at a mere $249.

A business that is already invested in iOS, and already set up to manage iOS devices like iPhones and iPads will still have reason to choose an iPad Mini over other small tablet options. But, a business or consumer that simply wants a smaller tablet without regard for platform might find one of the Android options a better fit.

To quote from the hands-on review by Dan Moren and Jason Snell, “When you see one, and hold one, you’ll know if you want one.

I guess we’ll find out on November 2 if that $329 is worth it.

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