“Apple’s long-awaited iPad refresh is finally a reality,” Sameer Singh writes for BetaNews. “Apple’s new full-size iPad, rebranded as the “iPad Air”, starts at the usual $499 price. Apple also unveiled an iPad mini with retina display, with a higher starting price of $399 and retained the original iPad mini at $299. Finally, the aging iPad 2 was also retained with the price unchanged at $399. This essentially proves my theory that Apple’s pricing strategy has nothing to do with a ‘price umbrella’ and everything to do with margins.”
“If margins weren’t a concern, Apple could have retained the 4th generation iPad at $399,” Singh writes. “If Apple’s motive was to eliminate the price umbrella for competitors, it could have lowered the price of the original iPad mini to $249 or lower. Instead, Apple chose to reduce price by $30 which could be lower than the BOM reduction from last year’s launch. It is clear that Apple was spooked by the cannibalization and margin erosion caused by last year’s iPad mini launch and sought to correct that ‘mistake.'”
Singh writes, “This refresh may not have a major impact on holiday quarter sales. The most awaited product from this refresh, the retina iPad mini, is rumored to be in short supply until early next year and seems overpriced compared to market expectations. This leaves the $499 iPad Air, the $399 iPad 2 and $299 iPad mini. Based on this and the intensity of competition from cheaper, ‘good enough’ Android products, I wouldn’t be surprised if holiday quarter iPad sales remained roughly flat.”
Read more in the full article here.