Is Apple's iPad mini the price of a holiday stocking stuffer -- or too high?

The price of Apple’s new iPad mini stole the show at the company’s launch of its new tablet in San Jose Tuesday morning.

Some analysts expected Apple to come in with a price lower than the $329 the company set for the base iPad mini. Piper Jaffray analyst Gene Munster, for instance, expected Apple to offer a $299 8 GB model.  Wall Street appeared disappointed. Apple’s stock dipped more than 3 percent to $613.39 in after-hours trading.

Google’s 16 GB seven-inch Nexus 7 sells for $249 while Amazon’s seven-inch 16 GB Kindle Fire HD goes for $199.

Edward Jones analyst Bill Kreher said Apple is never concerned about setting its prices higher than those of competitors.

“They decided to go with a premium product as opposed to selling the product at cost,” he said. “They don’t want to be everything to everyone. But they now do have a seven-inch tablet that they believe and we believe is best in class.”

Needham & Co. analyst Charlie Wolf believes the $329 starting price for the iPad mini is low enough to allow Apple to dominate the smaller tablet market. Apple’s compelling design, high-quality and massive apps ecosystem sets it  in a class of its own, he said.

“It’s almost the price of a stocking stuff,” Wolf said.

“It’s going to make life difficult for the Kindle and the Nexus 7,” he said. “It’s certainly going to steal sales away from those two models — or, to put it another way, the opportunity for those two models will be far less than they were before the introduction of the iPad mini.”

All 275,000 apps developed for the full-sized iPad will run on the iPad mini, making the device even more appealing. And it’s sure to find a place in schools, said Wolf, pointing out there are  some 27,000 education apps ready to run on the iPad mini.

“There is a market for this product and Apple is going to exploit it,” he said.
John Boudreau John Boudreau (79 Posts)

I cover the intersection of Silicon Valley and Asia.