During Apple's fourth quarter earnings call today, CEO Tim Cook explained the company's pricing philosophy for the iPad mini in some detail. The following is a portion of our rough transcript:
When we set out to build it, we didn't set out to build a small, cheap tablet. We set out to build a smaller iPad that offered the full iPad experience. The difference between us and the competition is profound. 35% larger screen than 7" tablets. 2 great cameras. Fastest communications with dual bank Wi-Fi. Fit and finish of our precision enclosure is breathtaking when held in your hands. That's what we've done, the iPad mini has higher costs and gross margin is significantly below our corporate average. Height of the cost curve, but we want to make a large number and we're going to work to try to get down the cost curve and get more efficient with manufacturing as we've done with our other products.
One of the things we try to do is to create a product that people will love for months and years and continue using. That's what iPad Mini is designed to do. You can see that more broadly on iPad by looking at the usage statistics. Over 90% of web traffic from tablets is from iPads. Apple will not make a product that somebody may feel good about for the moment, but then won't use when they get home. That's not the experience we want our customers to have. I would encourage you to use an iPad mini and I don't think you'd be using anything other than an iPad once you do that.
