Is the iPad mini Right-priced for Education?

| Analysis

There was considerable speculation, indeed consternation, that Apple would call its new 7.x-inch tablet the iPad mini. And that’s what Apple boldly did. On top of that, the company aggressively positioned it as a premium 7-inch tablet and avoided a product line conflict with the iPod touch. Finally, does this new iPad have the right price for the K-12 education market? Let’s think about all that.

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First, I will have to admit that I lost an inside bet on the naming. Previously, I wrote that the Apple 7.9-inch tablet would be the “iPad 7” for various good reasons, primarily as a technical name that characterizes its market position. I think it’s amazing and instructive that Apple went with the common notion, one that had become entrenched over many months, and frankly seems a bit weak.

Image Credit: Apple

Also, it shows both a willingness to go with the consensus thinking, developed on the Web, and also a certain self-confidence that Apple’s brand is so strong that names open to poking fun can nevertheless become immune thanks to the enthusiasm for the product. After all, poking fun at some kinds of names can only last so long. The dignity and strength of Apple and monstrous sales overwhelm the silliness in the long run.

Product Line Positioning

Another thing that we wondered about was the positioning of the iPad mini in the Apple product line. There was the suggestion, in Apple’s announcement of the Oct 23 event that there would be an educational component. That lent credence to the belief that Apple might trade off specs against the iPod touch in such a way that the iPad mini could be priced nicely, in the $249 range, for education. After all, bigger doesn't have to mean more expensive -- if going after education is an imperative.

The fact that the iPod touch costs slightly more would be explained by the fact that it has a Retina display and that one pays the price for miniaturization.

Apple elected not to go that route, as shown in this table.

  iPod touch iPad mini
Screen Size 4.0 in. 7.9 in.
Display type IPS, Retina, 326 ppi IPS, 163 ppi
Display res. 1136 x 640 1024 x 768
Cameras FaceTime &
iSight
FaceTime & iSight
Sensors Gyro,
accelerometer
Gyro,
accelerometer,
ambient light
Weight 3.1 oz (88 g) 10.9 oz (312 g)
Thickness 0.24 in (6.1 mm) 0.28 in (7.2 mm)
Price (32 GB)* US$299 US$429

(*There is no 16 GB model of the iPod touch 5G, so I used 32 GB models to put the pricing on common ground. Cast that way, the iPad pricing is illuminating.)

The price that Apple pays for having the iPad mini placed clearly between the iPod touch line and the iPad 4th generation reveals a lot about Apple’s confidence that a premium 7.9-inch tablet will sell like hotcakes, can maintain the desired profit margin, and will still appeal to the education market. Scale, capabilities and pricing remain coherent. No drive to the bottom is contemplated.

It’s that last part that intrigues me, however. I know that many, many families and schools will be hard-pressed to digest even the 16 GB Wi-Fi model at $329 in K-12 --  educational discounts notwithstanding. As we know, Mr. Cook likes to brag about how well the iPads are doing in schools, but two factors remain missing: a really affordable price and strong corporate initiatives in the K-12 marketplace. Is Apple missing an opportunity?

I suppose one way to look at it is that the overwhelming acceptance of the iPad mini in other markets, and associated sales volumes, will pay off in education in the long run. Plus, we have a long way to go before tablets are routine in most classrooms, whatever the funding source, parents or schools.

I think the recognition of that led to Apple’s pricing, and so what interests me is the dichotomy between the overt enthusiasm for education in contrast to the market and product line realities that drove the pricing Apple selected. These choices are delicate indeed.

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Comments

FlipFriddle

I think it’s too expensive. I’m afraid the Kindle and Nook are probably going to get into schools easier. For me, it seemed like it was time to kill off the competition in this segment before it got going: take a hit on profitability on one product, and slam the door on the 7” tablet segment.

Terrin

Amazon and Google will not make a dent in the education market at least for a while. Apple has long established sales channels and understands the market. Further, Apple does offer educational price discounting. iBooks author also is a major inceptive for the education market.

Moreover, Apple’s device is very competitively priced. For instance, the Nexus 7 only comes with 8 GB of ram,  a front facing camera, and isn’t very durable (being made with cheap plastic). Apple’s device 16 BG, two cameras, and it is made out of metal.

Apple’s apps ecosystem is also better especially for tablets. The Fire HD has a underpowered processor, is tied into Amazon’s ecosystem, is also cheaply made, and has only one camera.

Terrin

PS:

Apple often times offers education only models to schools. So, if cost truly comes a factor, Apple can shave cost for education more than it already does by offering a less featured packed model. For instance, a 8 GB model.

geoduck

Is the iPad Mini Right-Priced for Education?

No. It’s too expensive. Hell, it’s just generally too expensive. Drop it by ~$100 across the board and then it would work for education and everyone else. As I said elsewhere I was afraid that TC was a bit too much of a bean-counter to take chances and try to bury the competition. This timidity does not bode well for the future of Apple.

Also, it shows both a willingness to go with the consensus thinking, developed on the Web, and also a certain self-confidence that Apple’s brand is so strong that names open to poking fun can nevertheless become immune thanks to the enthusiasm for the product. [/quote
That’s a very deft bit of tap dancing there. smile)
I’d say they are losing their nerve. It does not show “a certain degree of self-confidence”, rather Apple is now a company that is less willing to take chances on names. Remember when Apple invented the i prefix? Remember when Apple put Power ahead of all their PPC computers even when they weren’t as strong as the P4 Windows systems out there? That is a company that is willing to take chances on names. Going with the street consensus was to wimp out. This also does not bode well for the future of Apple.

FlipFriddle

I’m with geoduck here. It’s too expensive and the bottom line is all schools care about. No camera on a Kindle? So what. It’s a hundred bucks. The iPad Mini is priced for more well-heeled school districts and for well-heeled parents who are sick of their kids getting sticky fingers on their iPad.

Apple needs to think like Conan: What is best in [business]? To crush your enemies, see them driven before you, and to hear the lamentation of their women [shareholders].

Bryan Chaffin

Geoduck, I seldom find reason to disagree with you, but here’s my prediction: Apple will sell every iPad mini it can make at these price points. Accordingly, why sell it for less?

Neither Amazon, nor Google, nor Asus is making a profit on their devices (my belief is that Google is subsidizing the Nexus 7, which I think is orders of magnitude better than the Kindle Fire HD). Competing with either of those companies on price wouldn’t achieve anything other than generally devaluing tablets and lowering Apple’s profits. As noted above, Apple will sell the same number of iPad minis either way.

Terrin

FlipFriddle:

Who cares about the camera? Heck, I don’t know maybe teachers trying to incorporate it into lesson plans? Lots of cool apps rely on the camera. Just because you can’t envision the uses for the camera, doesn’t mean they aren’t there. Do a Internet search using,  “education apps camera.” You will teachers use the camera in the class.

Moreover, schools also care about not having to buy replacement products next school season. Nexus and Amazon products are cheaply made in comparison to the iPad. That isn’t even debatable.

You also glossed over that 1) Apple offers special education prices, 2) negotiates lower pricing for bulk educational purchases, and 3)  often times offers unadvertised special education versions of some of its products. For instance, my girlfriend, a teacher, has a special education issued only iMac. Apple will also give even greater discounts to schools on some last version products to clear inventory.

The point is $329 is Apple’s price for a consumer product that offers many advantages over the competition that may or may not be important to an individual consumer. $329 is not the price Apple charges schools for bulk purchases or even individual purchases.

Terrin

PS:

Neither Amazon or Google has the tech support and sales staff dedicated to education like Apple does. That support costs something and has value.

webjprgm

Typo in your chart.  It says “US$429” in stead of $329.

Bryan Chaffin

Thanks, webjprgm. Price typo fixed. smile

geoduck

Apple will sell every iPad mini it can make at these price points

That of course is the question, will they? If they do then I’m wrong. But if not, it wouldn’t be the first time Apple has released a product and then a month or so later had to drop the price to boost sales.

Bosco (Brad Hutchings)

(Maybe this will get posted on the right article this time?)

As a generic content player, iPad mini would be fine for education. In this price range, a classroom fleet of these is going to be dwarfed by networking, carts, locking them up, and managing the software.

The real problem is with iBooks. It’s Apple only. Politically, schools will have a tough time committing to this because it commits all of the parents, not just the ones who pray to Steve Jobs each night. The content that schools choose needs to work on a range of devices from a range of manufacturers. Schools will generally want this as well, as it gives them more power over price. One vendor gets uppity, you order from another vendor. That’s a game that Apple will have a tough time redefining.

John Martellaro

webjprgm:  That wasn’t a typo. Because there is no 16 GB model of the 5G iPod touch, I compared 32 GB models. (I did mention the 16 GB price of $329 in the body of the article.)

John Martellaro

Bosco:  Spot on.  What you’ve described is exactly what I was referring to when I used the phrase: “strong corporate initiatives in the K-12 marketplace.”  Just as Amazon makes the Kindle reader available on most platforms and for the same reason Apple makes iTunes available on Windows, iBooks needs to be cross-platform before Apple can say it’s genuinely committed to education.

Terrin

Brad has an interesting point about iBooks. However, many schools choose only Macs. Nonetheless, like iTunes, Apple should consider making iBooks compatible with at least Macs, PCs, and Windows Mobile devices.

iBooks Author does export to PDF.

Hagen

<quote> iBooks Author does export to PDF.</quote>
at the expense of almost every interactive feature iBooks offer. That defeats the whole purpose of having iBooks over standard ePub 2 books on any other platform.

wab95

John:

Perhaps severe jetlag is clouding my cognition, but I don’t see why, from a content consumption point of view, as an educator, I would be dissuaded from the use of the iPad in education (clearly many US secondary schools are not - like to the in Texas) on the basis of iBooks being proprietary. It doesn’t pass the ‘so what’ test. If my students can also run Kindle and Nook on their iPads (and they can), we can opt to go only with those books or all of the above. If anything, I have more options. Why should a school or an individual university professor for that matter care that the iBooks format cannot port to other platforms, particularly if as an institution, the decision has been taken to go with iOS? Inter-device compatibility is not their concern, but should they be concerned, they can go with non-iBook options or books available in all platforms. Moreover, as discussed today on Bloomberg West, for many textbook writers, iBooks is where they feel they can make the most money and is a huge growth industry at this stage, and the selection is rapidly expanding.

As for pricing; I see the question as practically moot, in this case ‘practical’ being a reference to observed consumer behaviour. Apple have shown that their products are, in the main, price impervious. Consumers, of which I would argue that there are, generally speaking two camps, have demonstrated that, if they are in the market for an Apple product, they will buy it, whether they are a personal or corporate consumer. Apple have been able to sell every iPad and iPhone they make, with nearly zero inventory at quarter’s end.

For those purchasing Apple products, including the iOS devices, it’s neither the specs nor the price but the package that they are purchasing. In the case of the iPad mini, however, the specs and the features (two cameras and an industry-leading build, for example) are impressive enough. It’s the package, however, of services, educational discount (I know for a fact that universities get a bulk discount; I’m sure this is also true for secondary and primary schools), and the ecosystem of apps, books, iTunes U, integration, online purchases and storage that put the iPad (mini or standard) in a class of its own. 

Apple have positioned all of their products and services, all neatly interwoven into an industry-standard ecosystem, as a value proposition. Consumer behaviour has empirically demonstrated critical mass buy-in to that value proposition, which has largely over-ridden concerns about the price of any one product, within limits of course.  For those who do not see the value, or for those simply not in the market for anything Apple, there are, and will always be, other options.

miriam

From my point of view it is too expensive. It should be easier and cheaper to access educational information and devises. There is a great website for apps, www.educationalappstore.com, which specialises in educational apps for young kids, parents, students and teachers.

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