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Why Nobody Can Match the iPad’s Price

wired.com

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Re: Why Nobody Can Match the iPad’s Price

#2

Post by yock »

Apple can sell the iPad for $500 because they have the iTunes store backing it. They know they don't need to make money on the sale of the device because the entire point of buying the device is to buy apps for it, and Apple as we all know gets a cut from every sale.

Other manufacturers don't have this working for them.

Re: Why Nobody Can Match the iPad’s Price

#3

Post by aneth »

yock wrote: post #2

Apple can sell the iPad for $500 because they have the iTunes store backing it. They know they don't need to make money on the sale of the device because the entire point of buying the device is to buy apps for it, and Apple as we all know gets a cut from every sale. Other manufacturers don't have this working for them.

Apple makes a lot of money on each device. Their margins are consistent with the rest of their product line.

http://www.computerworld.com/s/article/9150045/Apple_makes_2...

Re: Why Nobody Can Match the iPad’s Price

#5

Post by markszcz »

I feel a lot of other companies are riding the tablet wave. Why would motorola underprice the Xoom when possibly they could make a killing on selling the next "iPad" killer.

If its true that Apple is sitting on a pretty price margin on the iPad, then the Xoom, I feel, wouldent be to far off. If they had to they could lower the price to gain momentum but so far this is Motorolas first good tablet release and I dont think they will want to miss an opportunity to make a pretty penny on this.

Re: Why Nobody Can Match the iPad’s Price

#7

Post by gabrielroth »

One factor that the author doesn't mention is Apple's success at lining up deals with component manufacturers. A couple years ago (before anyone had heard of the iPad) they locked in great prices on flash memory and LCD displays. They could do that because they were about to invent a huge market, and they knew it. Anyone trying to get into the tablet business in 2010 had to pay much, much more.

Steve Jobs and Johnny Ive are no slouches, but Tim Cook doesn't get enough credit for stuff like that.

Re: Why Nobody Can Match the iPad’s Price

#8

Post by netcan »

"That’s (Apple stores) advantageous, because if the iPad were primarily sold at third-party retail stores, a big chunk of profit would go to those retailers, Hiner reasons."

"Designing in-house means Apple doesn’t have to pay licensing fees to third parties to use their intellectual property. For instance, the A4 chip"

This is silly. Software development, retail, chip design etc. all cost money. Apple isn't just taking Bets Buy's cut, it's taking its risk and its costs. Same for chips, software, etc. Actually it's more risky and costly in many ways. If the chip turned out to be good but not ideal for iPads they're not going to go find a different market for it. Apple stores aren't free to cash in on whatever popular high margin non-Apple widget people are buying this season.

Vertically integrating obviously works well for Apple, but saying that Apple is able to sell iPads @ $500 because of it is missing the point. You now just have to explain what makes apple good at retail, software, chip design, etc.

Re: Why Nobody Can Match the iPad’s Price

#9

Post by netcan »

markszcz wrote: post #5

I feel a lot of other companies are riding the tablet wave. Why would motorola underprice the Xoom when possibly they could make a killing on selling the next "iPad" killer. If its true that Apple is sitting on a pretty price margin on the iPad, then the Xoom, I feel, wouldent be to far off. If they had to they could lower the price to gain momentum but so far this is Motorolas first good tablet release and I dont th…

I think the underlying assumption of this and other articles is that if they could, they should and would release a tablet at (at least) price parity. Therefore, since they aren't, the belief is that they can't profitably price under $500.
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