Pricing for the device is assumed to be $199, to compete directly with the Fire and the Nexus 7. However, this introduces a complication in Apple’s product lineup: the iPod touch. The iPod touch is, also, $199. Clearly, Apple can’t have both of these products at the same price. How much cheaper can they price the iPod touch? Even at $159, a 3.5inch iPod touch seems really expensive standing next to a 7.8inch iPad mini.
Reaching the sub-$150’s, though, you hit another price wall. The iPod nano sells for $129. Assumedly, they’d have to make the Nano cheaper as well.
$70 is the difference between an iPod nano and an iPod touch. On that basis, I’d expect a similar gap between the Touch and the iPad Mini. So how about a $199 Mini and a $149 iPod? The Nano then can go to $109. I suppose that’s a possibility.
But, just looking back at that paragraph, it doesn’t feel right to me. In fact, it makes me believe even more strongly that the Mini is not going to be $199. I think $249 makes much more sense. The $200-$300 price range is a market segment where the iOS ecosystem is currently absent; a $249 iPad Mini would be a great fit. Also, I think $249 is still cheap enough to suck the air out of the 7inch tablet competition. In the long run, the Mini could fall to $199, if necessary.
At launch though, I think $199 is overly price-aggressive and has too many implications on the rest of Apple’s lineup, to be feasible.