Apple Open to iPad Price Cuts if Demand Lags?

[MacRumors]

The Wall Street Journal reports on a research note from Credit Suisse analyst Bill Shope based on meetings with Apple executives revealing that the company has apparently left the door open to future price cuts on the iPad should customer demand not meet expectations.

Shope also wrote that despite the seemingly aggressive pricing of the iPad — the lower-than-expected price points range from $499 to $829 — 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),” Shope wrote.

Many observers were surprised by Apple's entry-level price point of $499 for the iPad, with general consensus having been that pricing would come in significantly higher.

Shope also noted that Apple seems relatively unconcerned about the iPad's possible cannibalization of other Apple product sales, following on the theme presented by Apple CEO Steve Jobs during the iPad's introduction that offered a clear segmentation among the iPhone/iPod, iPad, and notebook lines.

Article Link: Apple Open to iPad Price Cuts if Demand Lags?

 

[miles01110]

....Apple conforming to traditional economic laws such as supply and demand?????? Blasphemy!

 

[Eidorian]

The Apple TV and MacBook Air come to mind.

 

[sbrhwkp3]

The Apple TV and MacBook Air come to mind.

Macbook Air I could see.

Apple TV... not so sure.

 

[NeuralControl]

If Apple lowered the price increase of the 3G models, I am sure many more people would be glad to spend the extra money. If it was a $75 upcharge as opposed to $130, many more people would justify purchasing the "higher-end" model.

 

[ajones46]

....Apple conforming to traditional economic laws such as supply and demand?????? Blasphemy!

This. I remember the first gen iPod Touch 32 gigabyte version was $499

 

[Robert M.]

So can we expect a second gen with a camera and 64 gigs at $400??!!! Haha probably not...well a boy can dream!

 

[homsar]

Hopefully the prices will converge a bit too - $130 for a 3G unit and $100 for an extra bit of flash memory is a bit steep...

 

[Grimace]

If it's profitable to sell (it is) Apple will keep the price constant. Demand should be pretty solid for people looking to buy a netbook-type device.

 

[0ld-knight]

That would be so good!

Many people would buy it anyway, but if instead of 500$ for the base model it was just 400 or 350, it would sell like... umm.. like something that sells a lot!
Thats just an idea but.. what about sending emails to everyone that was thinking of buying one, in order to make them sell it for half the price? XD

 

[Chaos123x]

They should kill the 16gb model and sell the 32Gb for $499.


I mean 16gb on that? that's like putting 4gb on a iPhone

 

[Sky Blue]

Nobody buy it for the first year.

 

[zombitronic]

Cue an open letter from Steve and $100 rebates for disgruntled early adopters.

 

[azentropy]

It is not the price that would keep me from buying, it is the lack of features.

Some can be fixed with software, like adding Flash and multitasking but some will take hardware revisions - SD slot, camera, HDMI etc.

A big iPod Touch just isn't that compelling to me...

 

[bdkennedy1]

It's easy to lose interest in something you can't buy.

Apple needs to stop this nonsense of debuting a product and not shipping it until X months later. They could have done the keynote next quarter.

 

[sbrhwkp3]

It is not the price that would keep me from buying, it is the lack of features.

Some can be fixed with software, like adding Flash and multitasking but some will take hardware revisions - SD slot, camera, HDMI etc.

A big iPod Touch just isn't that compelling to me...

... until you pick it up and use it.

 

[aristobrat]

Macbook Air I could see.

Apple TV... not so sure.

The prices of both have already been cut.

The $1499 MacBook Air used to be $1799.
The $1799 MacBook Air used to be $3099.
The $229 AppleTV used to be $329.

 

[Sasha-1]

personally I think the market is undervaluing this. I hear all the screams and I know a lot of folks wanted something else. That being said I still see this flying off the shelves. I guess we'll see how that goes in the next 90 days, plus a quarter.

I think the apps for this are going to prove appealing. And the always connected nature of a 3G device will drive the higher end with cell radios.

 

[irun5k]

It is not the price that would keep me from buying, it is the lack of features.

Some can be fixed with software, like adding Flash and multitasking but some will take hardware revisions - SD slot, camera, HDMI etc.

A big iPod Touch just isn't that compelling to me...

Right, a major software revision + the hardware most expected (front facing webcam, etc.) would make the $499 price point easier to swallow. Also, if could add the iPad to my existing AT&T iphone 3G service for a nominal fee, that would be a big plus.

I get the feeling they just haven't come up with the right secret sauce yet that will make this thing a huge success. If revisions are only going to come annually, I feel like the thing may be doomed.

 

[Magaman]

Two things, first they could treat it as a loss leader and then make their money on selling apps/books/music/movies.
Second they should do a crazy student discount, get this thing in the hands of students and then cash out on textbook sales.
As of now I'm still waiting.

 

[nutjob]

This isn't a blockbuster product, don't believe the hype. It's a larger iPod touch and an eBook reader. It's not a replacement for netbooks, since it's not actually practical for real work (has anyone tried actually editing text on an iPod touch or iPhone?). They will sell initially because of the hype and then fade somewhat and require Apple to prop it up a bit if it wants to make a dent in the ebook market.

This really is a ho-hum product, I can see Apple rethinking it in the future and thinking about how a product like this relates to their laptops. Maybe then they'll come out with something interesting... that runs the full OS.

 

[gibbz]

Oh great!

Now when Apple drops the price, we can look forward to everyone bitching and demanding refunds just like with the original iPhone.

 

[notjustjay]

I find it odd that everyone is shocked at how cheap the thing is compared to their expectations (there was even an audible collective gasp from the audience during the keynote!) and at the same time everyone is complaining about how expensive the thing is.

Perhaps the two are resolved because people think the $100 upcharges for each of the memory upgrades and the $130 upcharge for 3G is too steep. I don't know how much it actually costs to upgrade from 16 to 32 or from 32 to 64 gigs of flash, nor do I know the actual cost of incorporating a 3G modem. But there's no carrier subsidy so it would have to reflect the actual cost (here again, everyone wishes the 3G part was included "free", yet they complain about carrier contracts...)

And now Apple hints that it could drop the prices even lower? I wonder if this smacks of desperation on their part. Perhaps they were a bit overconfident on the whole "netbooks are just a fad" stance, and now are rushing to get a piece of that pie?

My bet is on a surprise spec bump. Steve will pop out and say "Yeah, we know we said 16/32/64 gig at the keynote, but now that the product is here we decided to make it 32/64/128. Same prices. Surprise!" They've done it before.

 

[SandynJosh]

New products usually have an extra pad in the pricing to cover unexpected costs, once the production and distribution is running smoothly, this pad can be eliminated to spur sales growth. This may be what is being referred to in the opening story.

While I'd love to see Apple shave $100 off the pricing schedule, I'm happy to see that Apple feels there is enough profit in the original pricing to be able to duck further if market conditions warrant it. If Apple had no room to wiggle, they would be a sitting target.

 

[paul4339]

Hopefully the prices will converge a bit too - $130 for a 3G unit and $100 for an extra bit of flash memory is a bit steep...

Agreed. $130 is a bit too much to ask for 3G, IMO. $100 is in line with apple custom of charging a "premium" for memory (ie. rip-off).