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Why the iPad mini makes sense for Apple

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Ryan Jones of I Am Concise uses Apple's pricing strategy for the iPhone and iPod to demonstrate that the iPad mini is an effective way for Apple to fill its $199 to $399 price range for tablets.

Apple Earnings Money Cash (1020)
Apple Earnings Money Cash (1020)

iPad mini rumors have been swirling for quite some time, with reports from Bloomberg and the Wall Street Journal suggesting that such a device is in the works and will arrive later this year. Ryan Jones presents some solid reasoning on his blog I Am Concise, and says that the iPad Mini is an effective way for Apple to fill its $199 to $399 price range for tablets. Jones cites Tim Cook's statement that the company will avoid creating "a price umbrella," or a situation in which a dominant company maintains high prices and leaves a large gap for low-cost products.

Using current prices for all iPhone and iPod models, Jones illustrates how Apple uses different products lines, carrier subsidies, and older hardware to provide lower price points. Currently there is no Apple tablet below the price of $399, which would mean that Apple needs to offer iPads on carrier subsidies to eliminate the price umbrella, or is working on much rumored iPad mini to fill the market gap and compete with Amazon's Kindle Fire and the Nexus 7.