Let's Be Real About (Future) Prices Now!

[Orange™]

The numbers below refer to the 16GB Wifi-only iPad:

The current model is $499
The retail is $429

Assuming the new base iPad is $499 (strong assumption)
We are to assume the 1st gen will drop to $399
Leaving the refurb for the 1st gen $349


Do these numbers sound accurate?
I would like to buy myself a new iPad 2nd generation (assuming March second actually has something worthwhile), besides that, I would like to acquire one for my mother because her POS sony laptop is a POS.

Thanks in advance. Also, a big favor to ask if you could list the available tablets in that price range, while I would like to go with Apple, anything would do for her use (as she isn't used to any, the end result is the same for her). I hear the Galaxy dropped it's price in half to $300. Is this true? Sounds very tempting...

 

[hi res]

If you've ever at all researched/used/pondered buying an iPad....THEN DO NOT BUY A GALAXY TAB! You will rue the day you buy one of those POS's. Seriously, take a trip to Best Buy and pick one up for 5 minutes...you'll see what I mean. I too will be getting the deuce when it comes out, but a first gen iPad will not reach obsolescence for quite some time. If price is important original iPad is still not a bad buy.

 

[vrDrew]

I believe Apple will do everything it can to keep pricing on the (entry model) iPad v2 at $499.

IMHO, that price point has been key to the iPad's initial runaway success. Start rising the entry point to $600 - $700, and all of a sudden more conventional laptops start to look a lot more appealing to many consumers.

That said, once a new version is announced, Apple is going to have at least some stock of new, existing v1 models left over. These may well get discounted by $50-75 or so. Or offered with $50 or so of App Store credit. But don't count on "door buster" retail pricing from Apple.

Actually, I believe that by introducing iPad v2 now, with some slightly better features, Apple has subtly destroyed the chances of many of the upcoming Android/HP/etc. tablet makers. And here's how:

Out of the roughly 15 million or so iPads sold over the past year, I'd bet a million or two will be sold by people eager to get their hands on the latest and greatest iPad. And these "slightly used" iPads will hit Craigslist and e-bay, and end up selling for $300-$400. In other words far below the retail price of the upcoming Android tablets. If you were a consumer looking to take the plunge on a tablet, which way do you go? Spend $700-$800 for an untested device, with little available software. Or buy a gently-used iPad for half the price?

By introducing iPad v2, Apple has created something no manufacturer in the world could possibly match: The 6-month old "used" iPad- with all the functionality and features of the original, but at a price even Apple couldn't make them for.

 

[chrishemley823]

Thank you for not calling it an iPad 2. These people...

 

[baummer]

I wouldn't be surprised if they lower the entry price point. This would severely undercut their competitors.

 

[vrDrew]

I wouldn't be surprised if they lower the entry price point..

Its possible they might lower the price. But I doubt it.

First, even though Apple probably has the best overall cost structure, it still has to deal with the same macroeconomic forces as everyone else. And one of them is the fact that prices are rising in China. Foxxconn recenty raised wages significantly; fuel prices have increased dramatically; and the RM has appreciated against the US dollar. I suspect that at some point all those extra costs are going to show up in product prices.

Secondly, Apple is going to be looking at presumably higher component costs: Adding a camera (or two), more RAM, and a faster processor is going to cost something. Apple might be able to offset some additional BOM cost by a more cost-efficient design - but not by much.

Lastly, Apple doesn't want to severely reduce their margins. The market and investors will tolerate some tradeoff of profits for marketshare. But not much. The iPad line, in general, doesn't have the same margins as most of Apple's other flagship products.

As I said above, by intro'ing a second generation iPad now, Apple is effectively undercutting the Xooms and HP's and Samsungs by creating a market for ~$400 used iPad v1 units.

 

[poloponies]

Assuming the new base iPad is $499 (strong assumption)
We are to assume the 1st gen will drop to $399
Leaving the refurb for the 1st gen $349


Do these numbers sound accurate?

These numbers sound like wishful thinking, nothing more. Apple's not going to continue manufacture of current-generation iPads and if it did it certainly won't discount them to $399. The new low-end version will be $499. Refurb current iPads will still be available at $429 but not for long.

 

[deeddawg]

These numbers sound like wishful thinking, nothing more. Apple's not going to continue manufacture of current-generation iPads and if it did it certainly won't discount them to $399. The new low-end version will be $499. Refurb current iPads will still be available at $429 but not for long.

I agree, it's unlikely the current gen will continue to be sold at retail. There's not currently a reason to do so. I believe Apple only kept the bottom end iphone 3GS due to the low priced Android phones, possibly at AT&T's request.

Refurbs will be cleared out, old stock will either be discounted until gone or shifted to the refurbished/clearance store. Some quantity of refurb/old stock will be set aside to handle applecare replacement claims. I doubt prices will change much from the current refurb store unless Apple does a shift in price/capacity on the new version ipad.

 

[zhenya]

While I'm not sure Apple would do it, it would be extremely aggressive of them to keep the 1st gen 16GB wifi model available for say $399. The reality is that, despite it's limitations, it is, and will continue to be perfectly adequate for many users for some time to come - just like the 3GS is still a decent seller because of the extremely low cost of entry. In the old days I don't think Apple would have ever done this, but today, with their quest for market share domination in this segment, it might be a shrewd move.

 

[KittyKatta]

In the old days I don't think Apple would have ever done this, but today, with their quest for market share domination in this segment, it might be a shrewd move.

Apple leaped straight to the top of the cell market in record time, but here we are and Google is giving them some solid competition. With tablets then Apple is in an even better position, but you can see that Google/RIM/HP are going to try their best to shorten that lead.

Dropping prices isn't typical for Apple but IF the iPad 2 is only an incremental upgrade then manufacturing costs may be low enough that they would drop the price to ensure their market dominance.

 

[zhenya]

Oh, I don't think they'll drop prices on the new iPad, just that keeping the base model 1st gen and dropping the price on that may be a good way to increase sales even more - and really, getting the customer is the key. Once they start to invest in the Apple software ecosystem, it's going to be a lot harder for them to leave in the future.

 

[Piggie]

Apple leaped straight to the top of the cell market in record time, but here we are and Google is giving them some solid competition. With tablets then Apple is in an even better position, but you can see that Google/RIM/HP are going to try their best to shorten that lead.

Dropping prices isn't typical for Apple but IF the iPad 2 is only an incremental upgrade then manufacturing costs may be low enough that they would drop the price to ensure their market dominance.

However you need to remember, part of the Apple ownership is one-upmanship.

Like jewellery or perfume. Part of it's appeal is it's high price.

There are people who would despise an iPad at $199 and seeing every second person carrying one. the same for MacBooks and iMacs.

I'm not saying every Apple lover is like that, but it's a strong human nature to feel something nice when you have something you feel is special and that others don't have.

 

[poloponies]

Oh, I don't think they'll drop prices on the new iPad, just that keeping the base model 1st gen and dropping the price on that may be a good way to increase sales even more - and really, getting the customer is the key. Once they start to invest in the Apple software ecosystem, it's going to be a lot harder for them to leave in the future.

This is a brand new market. While Apple may have led the way they don't expect to get 100% of sales going forward. Keeping a 1-year-old tablet in the lineup when you're promoting new features is not a strong selling point. And before you argue about them still selling the 3GS iPhone, it's primarily a phone and still functions well in that capacity and the smartphone functions are decent for the price. AND it's heavily subsidized by the carrier. You're proposing that Apple pay a $100 marketing premium for new purchasers. They don't need to do that. It's certainly possible that if 90% of purchasers go for other tablets this year that Apple might cut prices or do something dramatic but it's doubtful that would ever happen.