Friday, October 26, 2012

Apple Inc. (NASDAQ:AAPL): Why is the iPad Mini Over-Priced?

A lot of theories have been discussed as to why iPad Mini will cost $329, when rivals Amazon and Google have tablets rated at $199. Some of these are – Apple Inc.(NASDAQ:AAPL) enjoys a loyal customer base who might be willing to pay a higher price in order to remain with their favorite brand, the company wants to keep the profit margin intact, or because the product surpasses its competitors in terms of quality.

But Siu Han and Alex Wolfgram at DigiTimes envision a different problem altegther – issues of supply constrains with the company not being able to source enough screens for the iPad Mini at a reasonable rate. The GF2 (DITO film) touch screen technology used by the tablet has therefore become exclusive, and subsequently the price has greatly increased. Apple is finding it expensive in replicating this technology, which is the device’s main US.

Apple has made a smart move by underplaying the demand instead of generating massive amounts. This will keep the price at an all time high and users will still purchase it. This strategy is not new for Apple – it has been tried out with the iPhone as well. The smartphone’s prices were slashed when its supply chain and carrier networks ramped up. However, the market trends have changed immensely with rivals coming up with suitable lower-end tablets that put the sales of Apple somewhat in jeopardy.

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