It would be timely to reply to Yen Fung Wong’s blog on the iPad mini as it has been nearly two weeks since the iPad mini’s release.
Apple sold 3 million iPads (the mini and the fourth gen) over the first three days following the release of these two products on November 2nd. Though the numbers regarding the sales of each tablet were not disclosed, Apple CEO Tim Cook said that Apple Inc. set “a new weekend [sales] record and practically sold out of iPad minis.”
Nexus 7 sales are approaching 1 million a month, and life Amazon Kindle Fire lifetime sales, though not publicly disclosed, are estimated to be 5 million. Information on Kindle Fire HD sales is limited .
The iPad mini is at heart similar to the dated iPad 2 (same processor, resolution and RAM). The mini is newer than its Amazon and Google counterparts and its specs are in many ways worse than the two, yet its price is over 50% higher. The mini lacks retina display unlike many new Apple products. So why is the mini showing signs of early success?
Some possible reasons are that there is not another well-known tablet at the same price point. ($329 for the entry-level iPad mini and $199 for the basic Kindle Fire HD and Nexus 7). A higher price often entails a perception of higher quality. Consumers also buy products for their benefits and not their features; obviously, many Apple patrons buy Apple products so they can be associated with the stylish brand. These consumers are likely to have a relatively inelastic demand (which is good for sellers); the lower-priced Kindle and Nexus serve those who are more utilitarian and more price sensitive.
It seems that relative to the competition, the mini is doing well, so I would disagree with Yen Fung’s idea that Apple should not focus on diversifying into the e-reader/tablet market. The fact that Google and Amazon are roughly breaking even with their tablets while selling a lower volume than Apple is likely a source of a sustainable competitive advantage for the promising iPad mini.