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iPad 3 faces bargain ratio amid $99 HP TouchPad, free Android tablets

September 6th, 2011 amacstudio No comments

Apple dominates the tablet market as the iPad 2 fades into the iPad 3 era. But in a month in which HP is giving its TouchPad tablet away for $99 and Amazon is talking tablets after having low-balled Apple’s iTunes Store with its AmazonMP3 offering, Apple must choose carefully when it comes to pricing the iPad 3 whether the product sees its release date this fall or next spring. That point was driven home for me this evening when a (geek centric) entity tried to lure me to an event with the promise that a number of Android-based tablets would be given away for free. Nice try. My time is valuable, and Android tablets aren’t. But these events all beg the question of whether Apple and its $499 and up iPad pricing strategy may have a problem by the start of the iPad 3 era.

With carrier preference being the single most important factor for most smartphone purchases, and carriers playing very little role in tablet buying decision, parallels between the two markets are tenuous. However, Apple’s smartphone competitors have played up the price angle such that Apple ultimately opted to leave last year’s iPhone model on the table for under fifty dollars even as the current model costs four times that much. Some expected the company to adopt that strategy with the launch of the iPad 2, with the original iPad sticking around for some reduced $399 or even $299 price. That move never happened, as the iPad 2 launched at the same price points as its predecessor, which was discontinued. Now Apple faces a different tablet landscape just six months later…

Whether Apple opts to launch the iPad 3 this year or next remains a hotly debated topic, with no guidance from the company itself. The iPad 2 is similar enough to the original iPad that it’s been posited that Apple must have been working on a radically redesigned new iPad going back to the time the original was launched, and as it wasn’t ready yet, a less ambitious, more evolutionary “iPad 2″ was launched in its place. If so, they reason, that revolutionary redesign must surely be ready by now. If so, Apple could fend off any “But when is the new iPad coming out?” questions from would-be gift givers this holiday season, as was the case last year when the iPad 2 wasn’t introduced until after the holidays. Either way, price points now become an issue, and Apple has multiple options…

One is to stick to the premise that at $499 and up, the iPad is already as inexpensive as the cheapest of PC computers. Apple expects tablets to replace computers eventually, and has already positioned its tablet in what it considers a value-based price range. Another option is to play it safe by keeping the iPad 2 around at $399 in the iPad 3 era so as to reduce the entry price point without compromising the quality of the flagship iPad 3. A third option is to take a hit on margins and reduce the price of the iPad 3 even as its component costs remain the same. The fourth move would be to build the iPad 3 out of less expensive parts so as to reduce its retail price without reducing margins. Apple’s history suggests that these four options are listed in order of decorating probability. But it is a new era at Apple, both with the rise of new CEO Tim Cook and with the extreme pricing pressure being placed on the tablet market by competitors, even if much of that pressure it coming from failed tablets like the HP TouchPad and those who haven’t even yet entered the market like Amazon.

Repost from http://www.beatweek.com/news/9267-ipad-3-faces-bargain-ratio-amid-99-hp-touchpad-free-android-tablets/

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