Apple refreshes, renames iPad as 'Air,' goes Retina on the Mini

Both Milanesi and Gottheil figured that Apple stuck with the $299 price because it couldn't reduce the cost of materials sufficiently to retain its customary high margins.

"But I think consumers will see the value of the $299 price," said Milanesi. "It's a clear difference [between first-generation and the Retina models], and makes more difference in this world than in smartphones, where carriers subsidize. One hundred dollars does make a difference to those people who are looking for their first iPad."

Gottheil, who had expected a lower price for the first-generation iPad Mini, chided Apple for not rolling the dice and competing in dollars. "It's higher than I thought they would do," Gottheil said. "But I suspect they could not do what they really wanted to do, simply on a cost of goods basis."

The $299 price will give Apple a better chance at competing with Android, specifically the Nexus 7, which Gottheil saw as the benchmark rival. "It's a big issue, I think. It's not low enough to make a huge market impact," said Gottheil. "Somewhere around $249 or $269 would have given them the 'Never mind the other guys' advantage."

Milanesi disagreed. "[The] original iPad mini at $299 with the rich ecosystem will matter more to consumers than [a high-resolution display] on competitors' products similarly priced," she wrote on Twitter during the presentation.

Instead, the experts concurred, Apple again stressed its strategic vision with the pricing of the Retina iPad Mini and last year's tablet. "Apple has decided to pay attention to margin rather than share, and accept that they will lose some share with these prices," said Gottheil. "That's clearly a strategic decision."

Many viewed the pricing of the iPhone 5C in the same light last month. Ben Thompson, an independent analyst based in Taiwan, made that case eloquently, positing that Apple's pricing model for the iPhone 5C was a reaffirmation of the Cupertino, Calif., company's brand positioning rather than, as most others expected, an attempt to go low and grab market share.

So it was today.

"At the end of the day, it's the brand experience that they deliver on top of these devices, the software and services and app innovation, that separates Apple from its competitors," said Thomas Husson, an analyst with Forrester Research, in an interview. "What differentiates Apple in the space is not necessarily hardware innovation, but the value and benefit to consumers of the entire ecosystem. And the pricing today speaks to the premium position that they want to maintain."

Apple also revealed the delivery date of OS X 10.9, aka Mavericks, which it will release today. The upgrade will be free, a first not only for Apple, but also for any major commercial operating system vendor. "Today, we announce a new era," said Craig Federighi, who leads OS X and iOS engineering at Apple and replaced Cook on stage for a few minutes to tout Mavericks. "Free is good."

Last year's OS X Mountain Lion upgrade was priced at $19.99, and the year before that Apple sold Lion for $29.99. Speculation about Apple making its Mac operating system free have circulated on occasion, notably in 2012 as rival Microsoft was readying Windows 8.

Federighi cited improvements in battery life -- up to an hour on existing hardware -- memory usage and performance from OS X 10.9, as well as new apps, including iOS' Maps and iBooks, continuing Apple's practice of seeding Macs with software that originated on the iPad or iPhone. "This one's a doozy," said Federighi.

Earlier in the event, Schiller also quickly spun through a refresh of the MacBook Pro notebook line, available today, that incorporate Intel's latest Core processor, code-named "Haswell," to sync the higher-priced laptops with the MacBook Air, which received the same chips this summer.

Apple, like every personal computer maker, has been hit by the slump in sales, and reacted today by lowering prices of the MacBook Pro models by $200. The 13-in. Retina-equipped MacBook Pro now starts at $1,299, a 13% price cut; the 15-in. models now start at $1,999, a 9% discount.

Schiller wrapped up by disclosing the price of the cylindrical Mac Pro, its radically redesigned power desktop: The system will start at $2,999, and go on sale in December.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at  @gkeizer, on Google+ or subscribe to Gregg's RSS feed . His email address is gkeizer@computerworld.com.

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