$329, Apple? Really?

Everyone knew Apple's (NAS: AAPL) iPad Mini was coming. The problem was going to be the pricing. As I wrote earlier this month:

There is no right price for the iPad Mini, and it will be Apple that pays the price for that unanswerable dilemma. If the iPad Mini is too cheap, the iPad suffers. If the iPad Mini is too expensive, no one will buy it. Skimping on features will make it dead on arrival. Loading too many of the features of its larger sibling will destroy the sibling's appeal.

That's pretty much where we are now with today's big reveal. At $329, it's too expensive to compete against the $199 devices that it was supposed to combat, yet it's also dangerously close to eating into what is probably the more profitable full-sized iPad on a unit basis.

For those scoring at home, let's take a look at the three cheapest models in the iPad Mini, iPad 2, and the new fourth-generation iPad lines. We're talking about $329, $399, and $499 price points, respectively, for the entry-level 16 gigabyte models.

The iPad Mini isn't simply the 9.7-inch iPad in a smaller 7.9-inch package. It lacks the crisp Retina Display graphics of the new iPad. It lacks the more powerful A6X chip. In terms of resolution and processing power, it's essentially the iPad 2 after shrinking in the wash. The dual-facing cameras are the higher quality ones found in the new iPad, but is that really enough of a difference-maker to someone choosing between $329 iPad Mini and the $399 iPad 2?

Now let's look at the Amazon.com's (NAS: AMZN) Kindle Fire HD and Google's (NAS: GOOG) Nexus 7.

There's a big difference between 7 inches and the iPad Mini at 7.9 inches diagonally. Apple's device covers 29.6 square inches of screen space, compared with just 21.9 square inches of real estate for the 7-inchers.

However, will that be enough to sway shoppers away from the $199 price point of the Kindle Fire HD or the Nexus 7? Probably not. The iPad Mini is going be a big seller, but it's going to come largely at the expense of Apple's pricier iPads.

By holding back on the specs so that the iPad Mini doesn't destroy the fourth-generation iPad this also opens the door for entry-level players to win the spec-sheet battle, too.

We'll find out in three months how this all plays out. Unlike way too many gadget makers, Apple is transparent enough to put out actual unit metrics on a quarterly basis.

Apple did one thing right, though. In updating its full-sized iPad now -- instead of the historical springtime refreshes -- it will create a more robust than usual demand for the company's tablets during the holiday quarter. In other words, it will seem -- on the surface, at least -- that Apple did the right thing by introducing the iPad Mini at its tricky price point.

We'll know better.

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The article $329, Apple? Really? originally appeared on Fool.com.

Longtime Fool contributor Rick Aristotle Munarriz has no positions in the stocks mentioned above. The Motley Fool owns shares of Apple, Amazon.com, and Google. Motley Fool newsletter services recommend Apple, Amazon.com, and Google. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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