Credit Suisse: Apple can lower prices on iPads if initial demand isn't strong
"Nimble" pricing on the iPad is baked into Apple's initial $499-$829 iPad cost matrix according to Credit Suisse analyst, Bill Shope (via the WSJ), who met with Apple executives last week.
Apple seemed to indicate it would respond with price cuts if demand for the device wasn’t revving up the way it liked. “While it remains to be seen how much traction the iPad gets initially, management noted that it will remain nimble (pricing could change if the company is not attracting as many customers as anticipated),”
The iPhone was originally introduced at a $599 price point and was subsequently dropped to $399 after a few months. The price drop was met with some significant negative reaction from early adopters. Apple then gave those early adopters $200 in Apple credit which largely calmed the "outrage". For that reason, it is doubtfull that Apple could drop the price as significantly with an iPad.
Analysts recently guessed that Apple makes $208 on each iPad sold at the current pricing.
Shope also notes that cannibalization of other Apple products is being minimized by "segmentation of capabilities"
Apple wants the iPad to be the best device for a few key use cases. For instance, the company believes it could eventually be seen as superior to both handheld and notebook devices for browsing the Internet, using the App Store, and consuming mobile media (video, photos, and e-books). Nevertheless, in other areas, notebooks, the iPhone, or an iPod may be more appropriate. This clear segmentation of capabilities suggests that cannibalization may be less of a concern than most currently believe.
Perhaps this is one reason we aren't seeing a camera on the iPad.
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Comments (16)
Oh that is nice to know. So, those of us who want to buy one should just wait a little longer for the price to come down even more???
Announcing a product that you can only order in 60 to 90 days is the dumbest thing ever, as it kills interest in the product!
I would have ordered one immediately after the announcement. Now, I'm like, "90 days for the 3G model... Do I even want it? Can I live without it? Fuck it, I will wait until generation 2 comes out"
$10 says I will completely forget about it by the time it comes out.
When the unibody MacBook Pros were announced, they were out within a week. I bought one the first day.
Dumb move, Apple!
We had to wait 5 months for the iPhone after the announcement - did that kill interest in it?
But ok bud, you know better than Apple - god knows they've had a string of failed launches - you tell 'em!
If the non-stop iPad stories from now till launch don't keep you from forgetting about it - then the launch day lineup stories will do it.
One reason you have to wait 3 months is because it has to go through the FCC.
they don't want FCC to even give people a hint that there is an apple tablet.
Next gen will be different though, because you already know there is an Apple tablet.
Gotta say though, I would've bought one for my 12 hour flight if it's released already.
Dumb? I think Apple has done well doing exactly that over the years. iPhone for example announced in Jan and available in June.
I doubt seriously if you will forget the iPad.
Around March the ads will start showing up on air and the rumors will continue.
Magazines will announce their new apps which will include Sports Illustrated, Playboy, Home Mechanics, Newsweek, for example, I am sure you are a big fan of Sports Illustarated Swim Suit issue.
Yes, I think that $10 bucks would be a safe bet.
It wasn't entirely Apple's fault. The supply of magic pixies dust dropped considerably in unicorn land hours before Steve Jobs was scheduled to make his speech.
Yea, cause the same thing happened to the iPhone and look how that tanked.
The article incorrectly states that iPhone users received a $200 credit. It was actually a $100 credit.
Source: http://www.apple.com/hotnews/openiphoneletter/
That is the same source used in this article. Was the article read? Please correct. Thank you.
Correct you are, $100 store credit, but in my case also received a $100 credit from credit card company on price guarantee.
Like those price guarantees.
Will buy 64 gb 3G iPad on day one.
I have to agree that these "Apple executives" made a bonehead move by telling us they'll lower the price if we don't buy it. Then again, that's true of any product and any manufacturer, isn't it?
Maybe they should have said, "magical device at a rock-bottom price".
The sad thing is, the barrier to purchase from most people I've talked to isn't the price. It's no-flash, no-webcam and no-SD slot for picture upload or expandable storage. Even at half the price, I'd still rather keep saving for a full-blown laptop.
There's no way Apple will drop the price nearly as soon as they did with the iPhone. Expect at least 6-12 months before a change like that is made - if at all. I don't think they'll have any problems selling these things. Even if Apple were to drop the price of the iPad, it would be $100 off max.
They could drop the price on launch day. Or they better not drop it at all.
I think it really depends on how other tablets are priced.
They are simply saying that to put more fear into the hearts of competitors. The cheap tablet guys who will simply put Windows 7 on a tablet and let one poke at it with a finger will wonder if it is worth it to try knowing Apple can match their price at anytime.
This is stock manipulation BS. Any supplier of any product can modify prices to change demand.
Steve Jobs specifically referred to this in the Keynote. He said usually consumers have to wait for prices to come down over time, but he wanted to get this into as many peoples' hands as quickly as possible.
This is a stupid story that could be applied to almost any product - "Product will get cheaper over time"
Don't always believe what analysts tell you. These are the same people who got our countries into unprecedented levels of debt.
Some of us have been waiting for an AppleTV hardware update for ages, my point is if you want it, you'd be better off getting it!
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