Apple pinches tablet rivals on both ends in unveiling next-gen iPad

“Apple Inc. debuts its most significant overhaul of the iPad today in San Francisco,” Adam Satariano reports for Bloomberg. “For competitors trying to get a foothold in the tablet market, the most important announcement may be what Chief Executive Officer Tim Cook does with the older models already on the shelves.”

“As it introduces a new iPad decked out with faster processing speeds and a sharper screen, Apple may also slash the price of the existing model from $499, said Chris Jones, an analyst at Canalys, a technology research firm,” Satariano reports. “That would squeeze rivals such as Amazon.com Inc., whose $199 Kindle Fire – [with a screen just 45% of iPad’s screen] – is targeted at budget-conscious customers, he said.”

Satariano reports, “‘It will put pressure on those who are trying to undercut the iPad on price,’ said Jones, who said Apple may lower the price of the cheapest iPad 2 by $100 to $399… Apple controls 73 percent of the tablet market, according to Forrester Research Inc. Tablets introduced by Research In Motion Ltd., Samsung Electronics Co. and Hewlett-Packard Co. haven’t gained much interest.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “John C.” for the heads up.]

12 Comments

  1. If iPad 2 goes to $349, the rest of the industry will have a collective heart attack — except for iPad component and accessory manufacturers. We’ll find out soon enough.

    1. At the expense of the iPod touch business? Not that they aren’t willing to canabilize, but I would think strategically, no matter what, the iPad will come in at least 50 dollars than the most costly iPod touch.

    1. ipod touch is the ideal platform to kill of the wannabe ipad competition selling at a lower cost. Apple can easily up the spec for itouch (larger screen) and sell it for $250 so the competition will end up comparing themselves with itouch instead of ipad with all the features that Apple would not have to bring about on that platform to provide sufficient mkt differentiation.

      This will leave the ipad market for those going for quality and for the business users. It will also avoid confusing larger businesses who need devices to last at least 2 years for their rollout cycles.

  2. When you think about it, there is very little chance any iPad would drop below $400. I’d love for them to prove me wrong in the next few hours, but if you look at the way iPhone pricing goes for older models, it is hard to imagine iPad to significantly diverge from that.

    The price for iPhone 4S is $650, and prior generation device (a year and 3 months, mind you) is just $100 cheaper (around 15% discount). The mark-up on the iPhone is higher, so Apple can afford that 15% lower retail price and still make a solid margin.

    On the iPad, which starts at only $500, even with the 15% discount for a device that is barely 1 year old (iPad 2), the retail price would have to be $425.

    Apple may decide to squeeze their margins on the older iPads by offering it at a steeper discount than it gives for older iPhones. But I don’t expect it to be as steep as iPhone 3GS (device that is, at this point, almost 3 years old!). And 3GS is now selling at 30% lower price than 4S. For the iPad pricing, that would translate into $350. Highly unlikely.

    1. Apple has a historic chance here to completely own the future of computing, dominance in the iPad space that crushes their competitors now could translate into a decade or two of enormous sums of money. This could be a motivating factor to drive down margins to kill off the hopes of the copy cats forever.

      Apple entered the space at an aggressive price and it’s 2 years in now. I expect they will go for the jugular.

    2. If the iPad3 has 4G/LTE, it seems likely that the carriers (ATT, Verizon, etc.) will provide subsidies for the iPad3 and lower its direct price to customers: maybe to $399 or $299.

      If so, that would cut very deeply into sales (going forward) of the iPad2, even if sold at a discount.

      Perhaps Apple will address this issue by making the iPad2 a 3G/wifi device which would also qualify for carrier subsidies … perhaps lowering its price at retail to $99 or $199.

Add Your Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.