Business: The Reason for the iPad Mini

The Reason for the iPad Mini: 

On a past Apple conference call, Tim Cook said "one thing we'll make sure is that we don't leave a price umbrella for people".  What's that? A price umbrella is when a company with dominant market share maintains high prices, leaving an opening for new competitors to enter at lower price points.  In the case of the iPad, the price umbrella until recently was at $499. Someone could enter that market at lower prices and exhibit classic disruption to push them out from the bottom up.
Apple has already solved this problem twice, with the iPod and iPhone.  So let's look at what they did. 

Source: iamconcise


Eliminating the “price umbrella”.

A price umbrella is when a company with dominant market share maintains high prices, leaving an opening for new competitors to enter at lower price points.

Three tactics to eliminate this price umbrella:

1. create a new product line (why Apple will launch an iPad mini)
2. keep selling old hardware (e.g. the iPad 2)
3. get someone else to subsidize the product