24
Oct 12

Reflecting on the iPad mini event

I’m still calling this the iPad mini event. But that’s only because it sounds much simpler than the MacBook Pro/iMac/iPad mini event. That was quite a boatload of technology.

Some observations:

Tim Cook. I thought he was much improved yesterday — compared to his performance at the iPhone 5 event, where he seemed overly coached and eager to hurl those adjectives.

The even-newer iPad. Surprise. The 4th generation comes only seven months after the 3rd generation. Never seen that before. Of course an update was necessary, if only to add the Lightning connector. Apple couldn’t very well be selling millions of iPads for the holidays sporting a connector that has no future.

The next new iPad? Taking iPad off its regular spring update schedule is a smart marketing move. By moving to a fall update schedule, Apple will enter every holiday season with a brand-new iPad. That’ll throw a bit more fuel on the flame.

The name. So it really is the iPad mini. The last time I remember the press guessing the correct name prior to the launch was the first iPhone. Probably for the same reason: it was pretty darn obvious. No need to re-frame the argument. Obvious can be a very powerful weapon.

The mini reveal. I really loved the way iPad mini was revealed — a shot of the big iPad, slowly revolving to reveal the mini standing behind it. This appears in the product video as well.

The price. Reaction to the $329 starting price has been swift and negative. It’s true that in consumers’ minds, $299 is worlds apart from $300. But any Apple analyst who gets upset over this should be ashamed for failing to understand one of Apple’s core philosophies. The company does not compete on price, it competes on quality. Apple does not sell to “everybody” — it sells to those who appreciate a premium product, and who are willing to pay a premium for it. Build quality aside, iPad comes with a more developed ecosystem, with a bigger choice in apps and accessories. Those who see value in this will pay for that value — as they have for every Apple product that has succeeded before.

The Android comparisons. Steve Jobs never shied away from jabbing the competition. But the amount of time Phil Schiller devoted to comparing the mini’s 7.9-inch screen to the Android 7.0-inch screen went on for some time. Obviously Apple did anticipate a negative price reaction, and this was its way of minimizing that.

The stock price. I’m no stock expert, but neither are the stock experts. Again, mass amnesia sets in. The analysts punish the stock price because they perceive a horrible misfire, then drive it up when the first earnings report shows that their concerns were unfounded. Investors are wise to trust history, not reflex reactions.

Nice marketing line. In the video, Jony Ive refers to iPad mini as “a concentration, not a reduction.” That’s a very designer-ly, Jony-like statement.

Dan Riccio. Now Dan gets his moment in the sun, appearing in the iPad mini video. Dan, if you recall, was promoted to take Bob Mansfield’s place when he retired — a promotion that didn’t sit well with some who worked with him. Then Bob mysteriously un-retired and returned to be part of Apple’s leadership team. Riccio kept his new title. On the official Apple bios page, Mansfield seems to be a minister-without-portfolio. He’s the only guy there with no job description. Whatever, Dan acquitted himself nicely on the video, and Bob was seen only in the audience during the event.

iPad mini commercial. The Heart and Soul duet played on iPad and iPad mini is a perfect example of simplicity working its magic. Everyone on earth knows what iPad can do. The news is that there is now a mini version. No need for labored demos — just a beautifully stark communication of the basic fact.

The iPod analogy. iPod revolutionized the music category. It became the dominant product, then continued its dominance by expanding into new models. This is what we’re now seeing with iPad. After creating the tablet market and dominating with a single product, it now expands its influence with iPad mini.

The dark sheep. At the end of the event, Tim Cook took special care to note what an amazing year it has been for Apple, just as he had promised when the year began. The list of updated Apple products is pretty astounding: Mountain Lion, iOS 6, the new iPad, another new iPad, two MacBook Pro Retina models, two new iMacs and now iPad mini. Equally astounding is the continued lack of improvement to Mac Pro. With every passing day, Apple makes it priorities more clear.

All in all, I thought this presentation gave us a boatload of interesting stuff. The style of the presentation may be a little more machine-like in Steve’s absence. The good news is, it’s a well-oiled machine.

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30 comments

  1. I was most impressed with the iMac, but I haven’t see the presentation of the iPad mini yet. I really wish Phil Schiller was a more dynamic speaker. He just seems doughy to me.

  2. I saw the presentation as a pre Christmas announcement. I’m amazed at how many new or updated products are going to be available with-in the next two weeks which was something Apple was never good at doing historically.

    Even more interesting was how little iOS was mention. It was all about the hardware. No chance for Scot Forstall to be heard or a mention of the soon to follow iOS update, which will be needed to run the new iPads, as well as a statement addressing the Maps situation

  3. Mac Pro? What’s that?

    Apple has really crapped on the creative community, i.e. design/FCP markets, with the lack of updates to the Mac Pro. And don’t get me started about the death of the Xserve. If there is anything wrong with Apple it’s the absolute abandonment of their support for the professional creative market. It’s astounding how they are simply ignoring us. And after all the years we paid top dollar for their slower-than-Intel workstations. Pathetic.

  4. Tim Cook stated earlier in the year that the new Mac Pros would be out next year, so not to wait now. So, while I agree that the purely professional market has been given little love by Apple in recent times, it is understandable as that market is minuscule compared to other markets that Apple is now operating in.

    Mind you, Apple knows that next year when the new Pros are released they are going to sell a gazillion of them.

  5. I think what most people don’t understand is, the Nexus 7 needs to be cheaper than Amazon’s Kindle. It needs to build up a bigger install base, hence become more attractive for developers.

    iPad mini doesn’t need to do that.

  6. On price and the stock market’s reaction: the decision to not singlehandedly wipe out the $199 tablet market (it’s not a 7″ market; it’s a sub-$200 market) with a more competitively priced product will truly show its genius over the next several quarters in financial performance. The so-called success of the Fire and Nexus 7 is still small: maybe 5-10 million units. Apple will easily be at a run-rate of a 100 million iPads per year. If the iPad mini isn’t a complete world-beater, eclipsing all competition, it is still likely to represent 15-20 million annual iPad sales. Even if that doesn’t substantially decrease the competition’s market share (I think it will still hurt their market share to a degree), it will certainly show up in the bottom line: Apple preserving 35-40% margins across the entire tablet line, outselling all competition, while its competitors will have losses are single-digit margins. So maybe there is an umbrella for competition rather than a complete massacre — but the competition has already priced themselves at near-zero margin for a huge market just beginning to develop, and they’ve still barely established the slightest foothold in the larger form factors where the devices platform and ecosystem really show.The tablet market, which may not reach smartphone scale but will easily eclipse PC scale, could look like the current smartphone market (or worse) — Apple taking home the vast majority of the profit with share only greater than, equal to, or somewhat lesser than the 2 or 3 other players left standing.

    Apple needed to learn to chase market share during the iPod revolution (I suspect because it wasn’t a true computing platform in itself), but I think they are relearning that profits at competitive scale handily trumps share. (This needs to be relearned because minority share leads to paranoia about market sustainability — but even Apple is still just waking to the fact that 5-30% of a billion unit market (with an average upgrade cycle of 1-2 years) is a huge, self-sustaining, and healthy ecosystem).

  7. My impression was sort of the opposite. Whereas Tim Cook seems artificially enthusiastic to the point of viewer discomfort (at least for me: “fantaaastic!,” “incre-e-edible!”) I always find Phil Schiller to come across as genuine, and genuinely enthusiastic. And he seems to have a pleasant sense of humor that’s visible at times in his presentations.

    Steve Jobs was an obvious marvel at these big product shows: his pride and enthusiasm were obvious and real and therefore infectious. In his absence, I personally think Schiller actually does very well.

  8. I think you couldn’t be more wrong about the iPad mini pricing. This feels like a John Sculley move; margin over market share.

    This is the maximum growth phase of the market and Apple can’t afford to let anyone else get an installed base. They need to be super aggressive on pricing now, even if it means a margin hit; they can always raise margins later on in the lifecycle of the market but winning marketshare from competition in a mature market is a lot harder and more expensive than taking market share from new customers as the market grows. Maybe they’re counting on the fact that the $199 tablets are all media tablets and don’t really have a lot of apps that can get stuff done, but it seems like a hell of a gamble.

    As a shareholder, I want them leaving no price umbrella even if it means taking a margin hit today. That’s how they moved in for the kill with the iPod and it served them well. They should be doing it here too.

    The only reason they don’t compete on price with Macs is because the market is too mature and they wouldn’t be able to gain anything by it.

  9. “As a shareholder, I want them leaving no price umbrella even if it means
    taking a margin hit today. That’s how they moved in for the kill with
    the iPod and it served them well. They should be doing it here too.”

    That’s funny. I seem to remember the iPod being the most expensive mp3 player when it came out. Wasn’t it like $500? Yeah, it had more capacity than all its rivals but the sticker-price led to a lot of sticker-shock in the consumer world.

  10. All this yap-yap about iPad Mini pricing is ridiculous,

    The Mini is NOT meant to compete toe-to-toe with 7-inch crap. It’s essentially an iPad in a smaller package, and it doesn’t need a retina display or the fastest processor. It simply answers the demand–from many–for a smaller form factor. It’s a REAL iPad–WITH a cellular option–at a commensurately lower price!

    Because of all this, the Mini will enable MANY MORE to get a REAL IPAD, and Apple will sell tons of them and leave the incessant price whiners in the dust yet again.

  11. As far as the iPad Mini pricing strategy goes vs the magical umbrella, I suspect we should look longer-term: when the iPad Mini 2nd generation comes out next spring the original iPad Mini can be priced down aggressively so there’s really something for everybody. Don’t just look at the present, keep the future in mind. That’s what differentiates strategy vs tactics, looking at the issue from many angles.

  12. When has anyone successfully raised margin after pricing at near zero margin? I can’t think of any examples. You can talk of companies trying to move margins from 8% to 10%, but we’re talking about a current margin of around 35-45% versus 0%. Other companies do it because their strategy is to productize/monetize another service or product at an even greater scale. That is not the case with Apple’s strategy.

    Also, you are overblowing the market success of the competition: you are talking exclusively about 2 specific units. Those units have virtually no significant international presence and even less international presence as far as their content ecosystems go.

  13. I think it was a slick and very well organised keynote (and I loved the live streaming of the event, they should do that more often) Tim Cook, as you said, is presenting better and better, and Phil made me smile with some of the little jokes he made. What did surprise me was how quickly they went over the iPad4 and Mac mini update announcement, and I am wondering what products are now going to be announced for the beginning of next year (the iPad,iPad mini, iPod,iPhone,MacbookPro, Mac mini, iMac are all now announced in the fall instead of during different intervals in the year). Perhaps Apple has some new product categories in mind for the beginning of next year (Feb-March), we will see. Just today I saw the new MacbookPro 13” ad, which has the same voice-over as the iPad2 ads, and I LOVE IT … Ken, what do you think? http://www.youtube.com/watch?v=HfiJOP2uGk4

  14. As far as the iPad mini ad, which I do like, is concerned: I think it would have been a great idea to see a kid’s hand come in to play on the iPad mini piano. I wonder, if they ever thought of that and if, why they chose not to?

  15. I think they thought the iPad mini would then look more like a toy for kids, instead of a serious tablet..

  16. This thot occurred to me yesterday as well. Between yesterday’s announcement and the iPhone 5 unveiling, Apple has revamped almost every product in its cash machine. iPhones, iPods, iMacs, iPads, Mac minis & MacBook Pros.

    Just in time for Christmas. And Windows 8. And Surface. And Kindle HD.

    (Except for the Mac Pro %&@#!)

    And the iPad 4 is a serious upgrade with the new A6 cpu. That thing seriously blows any other 10 inch tablet to heck combined with the retina display.

  17. Yes the iPad mini’s price might be a bit more that expected, but
    next year Apple will have a $200 iPad mini (when the iPad mini 2 comes out) and Amazon, B&N & Google still
    won’t have 30 – 40% margins.

  18. Comparing a $200 piece of plastic junk to that of a highly refined alumni-unibody Tablet is a little stupid if you ask me. If you can’t tell the difference, may I suggest stopping at LensCrafters before BestBuy.

  19. The price of the iPad mini is just as low as Apple want to make it to still turn good profit out of it. Apple makes its devices more likely with an awesome quality, than for a low price. In case of the iPad at least it wants to keep the price down and drives on the line between making the price too low and making the quality going worse because of that, or setting the price a bit higher to reach a great quality product.

  20. Just shows you have never met either man.

  21. Glenn Carpenter

    Certainly true and wasn’t trying to imply otherwise.

    I am curious, though, if you have met these men, how your in-person impressions differ from my remote-viewing impressions. Not a joke, would really like to know your thoughts.

  22. Even thought the iPad Mini may be more expensive, I think it will still be a huge hit. They have already sold out of pre-orders, so we know they are doing something right. Ever since I heard about the Mini from my co-worker at DISH, I have been trying to find anything and everything about it. I have a regular iPad now, but it is too heavy to carry around with me in my purse, so I have been shopping around for a smaller tablet. I have been looking for a while, but none of the other small tablets has been appealing to me, which I am guessing is because I already have an iPad. With having to travel a lot and always being on the go, I like to have my iPad with me so I can watch all my shows on the DISH Remote Access app. I can access my DVR and subscription channels and watch live TV. The smaller iPad would definitely work for that, and I can easily carry it with me everywhere I go. The Mini will be a great holiday present for anyone that wants a tablet.

  23. The spreading of the different iPad today seems becoming one of the most trend gadgets that mostly people are using. It is because the coolest features from with it is more competitive and very useful.

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