Developing…refresh this post for the latest.
This is what we can say with some certainty about Apple’s tiny tablet: It will look somewhere between a large iPhone and a small iPad, will have a 7.85-inch display that’s not quite retina, will share guts with the iPad 2 and iPod touch, and will be announced sometime in the next several weeks. It will likely come in black, anodized aluminum, and possibly white. There could very well be a 3G version.
That makes price the only real question left. It’s also the one Apple’s going to have the hardest time answering.
A Premium Blend
This should be easy. After all, unlike the iPad—which established the 10-inch tablet market to Apple’s devastating advantage—there are already a host of 7-inchers in the world. There have been for some time; long enough, at least, to cement consumer expectations of what a 7-inch tablet should cost. And that amount is between $200 and $250.
So, no problem! Let’s say the iPad Mini starts at 16GB (reasonable, since all the other iPads do). That would put it up against the equivalent $200 Kindle Fire HD, the $230 Nook HD, and the $250 Nexus 7. Assuming Apple doesn’t mind sitting on top of the pricing totem pole, $300 makes perfect sense. Done.
But let’s take one more look at those devices. The Nook HD has the best display of any 7-inch tablet, and an OMAP processor that outclocks the Kindle Fire, and the Nexus 7 (and iPad Mini’s rumored A5). In fact, at that $300 price point you could score a 32GB, 9-inch Nook HD+. Similarly, the Nexus 7 can match any tablet on design, has a blazing Tegra 3 processor and 1GB of RAM muscling a silky Android Jelly Bean platform, a near-retina display, and the full might of the Google Play store behind it. In both cases, at $300 Apple would be asking people to pay significantly more for a product that offers, on many fronts, less.
Then there’s the Kindle Fire HD, from a company with nearly as much brand recognition as Apple, a content ecosystem that beats the crap out of iTunes, a retina display. All for—again, hypothetically—a hundred bucks cheaper. In fact, for $300 you can get 9-inch, retina display Kindle Fire HD, a free month of Amazon Prime, and (in most places, still) not pay taxes on any of it. Buying that over a smaller, less equipped iPad Mini may not be a no-brainer. But it’s closer to one than Apple should be comfortable with.
So why not go cheaper? It’s not that Apple can’t afford to. It’s that it doesn’t appear to want to.
The iPod Precedent
One of the not-so-secrets to Apple’s retail success is that it keeps things like pricing so simple you don’t have to give it much thought. Nearly every product in the Apple Store—the Shuffle, the nano, and the 3G iPads being the exceptions—costs a multiple of $100. Want the slightly better version of something? That’ll be a Benjamin.
It’s such an established system, in fact, that Apple may have priced itself into a corner. An iPad Mini would fall squarely between two devices: the iPod touch and the iPad. It’s expected to share the same processor with both, and will roughly split the difference in size. The 32GB iPod touch—the smallest available model—costs $300. The entry-level 16GB iPad 2 costs $400. It’s nearly impossible to imagine the iPad Mini costing less than the former and more than the latter. It would be confusing, and Apple hates confusion.
But $300 for a 16GB iPad Mini would be the sweet spot, wouldn’t it? Especially given that $100 increment fetish. Start with the $300 32GB iPod touch, add size (+$100), subtract storage (-$100), end up at $300. Start with the $400 iPad 2, subtract size (-$100), keep everything else the same, end up at $300. It also happens to fill in the pricing pattern every iProduct has marched to since forever (left, via Ryan Jones).
When Apple refreshed its iPod touch line-up just last month, it could’ve easily set a lower price in anticipation of the incoming iPad Mini. But it didn’t. And that’s worrisome.
Regression to the Mean
Not too long ago, people happily paid an Apple premium. You’d spend more for the same basic product because you trusted the brand and appreciated the aesthetic. Apple made a lot less money back then.
Now, though? Look around. Intel had to pay out $300 million to ultrabook OEMs to keep up with MacBook Air pricing. It’s commonplace for top-shelf Android handsets to start at $300 on contract; the iPhone still comes in at (a heavily subsidized) $200.
And then there’s the iPad. It’s easy to forget now, but one of the most remarkable things about the original Apple tablet was its price. It was cheap, for what it was, a budget Adonis forged by Tim Cook’s supply chain heroics and Apple Store retail efficiency. It took a year for Apple’s competitors to produce a reasonably decent 10-inch tablet at $500, and another to drive the price down to $400. And still no one buys them.
People buy the Kindle Fire, though. By the millions. The small tablet market is mature and competitive in a way that the 10-inch market—outside of the iPad itself—has never been. The Toshiba Thrive is Glass Joe; the Nexus 7 is Mr. Sandman. And it’s way cheaper than $300.
How Apple prices the iPad Mini matters beyond just the number of units it sells. If it’s less than $300, CEO Tim Cook has keyed into the threat that Amazon and Google pose to its handheld computing empire. And he’ll crush them. If not? Then it’s another sign—along with Maps, along with that $30 dock connector adapter—that the old Apple hubris might be sneaking back in. The kind that dominated back when Apple was cool and niche, not the most successful business in the world.
So maybe the biggest question about the iPad Mini isn’t really price after all. Maybe it’s: What kind of company does Apple want to be?
Ryan Tate over at Gawker got his hands on some of Twitter’s financial numbers for 2010 and early 2011 — and they aren’t pretty.
In the first quarter of 2011, Twitter brought in $23.8 million in revenue and lost $49.2 million — with a net loss of $25.8 million for the quarter.
2010 doesn’t look that great, either: the company brought in $28.5 million and had a net loss of $67.8 million.
It’s important to note that this is all before Twitter really got serious about advertising. It’s revenue should have grown nicely through the year. But, the company doubled headcount, so it could still have serious losses.
Here’s the breakdown from the Gawker piece, according to Tate’s source who “has knowledge of the company’s finances”:
Jan. 2011 – Apr. 2011
Revenue: $23.8 million
Cost of revenue: $18.7 million
R&D cost: $13.1 million
Sales and marketing cost: $5.4 million
General administrative cost: $12.0 million
Total costs and expenses: $49.2 million
Loss from operations: $25.4 million
Loss from interest and other: $404,000
Net loss (non GAAP): ($25.8 million)
Jan. 2010 – Dec. 2010
Revenue: $28.5 million
Net loss: ($67.8 million)
Assets: $221.5 million (as of Dec. 2010)
Liabilities: $221.5 million (as of Dec. 2010)
We’ve reached out to Twitter for comment, but haven’t heard back yet.
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Dollar stores are booming in a struggling economy, and one of the big boys of the industry is doing so well it’s planning another period of explosive growth, reports Gail Hoffer and Drug Store News.
It will open 625 stores and hire around 6,000 employees over the course of 2012. The discount chain already has about 9,800 stores spread across 38 states, and some of the new stores will be in previously unoccupied states California and Massachusetts.
Dollar General has adopted an aggressive growth strategy since the start of the recession. This marks the third straight year it has opened hundreds of new locations, and the chain has created more than 21,000 jobs since 2009.
It’s not all about the economy though. Dollar General had to be smart in its expansion strategy too — after all, Walmart is its biggest competitor, and the world’s largest retailer has had similar success recently.
It thrives on hitting markets that Walmart hasn’t taken over, such as small towns that can’t support one of Walmart’s massive big box stores. It also competes with the other big dollar store chains, like Family Dollar. The hybrid concept — somewhere between a giant discounter and a small dollar store — has worked admirably.
Plus, while dollar store marketing plays a significant role in getting people through its doors, Dollar General is actually also a clear leader in price over both Walmart and its dollar store compatriots.
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Dr. Augustine Fou is Digital Consigliere to marketing executives, advising them on digital strategy and Unified Marketing(tm). Dr Fou has over 17 years of in-the-trenches, hands-on experience, which enables him to provide objective, in-depth assessments of their current marketing programs and recommendations for improving business impact and ROI using digital insights.
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