About that "Apple Could Drop iPad Price" Story

Steve Jobs with iPad on Chair

The Wall Street Journal today posted a comment from an analyst that Apple will remain "nimble" on iPad pricing and could lower it if demand is less than expected.

Um. Yeah. Okay. Did anyone, especially anyone who ever took Intro to Business 101, ever think anything different? Wait... Apple does.

They launched the iPhone 2G at a premium then cut the price, and then arranged carrier subsidies to further cut the end-user price to really drive demand. They don't drop price to help low-performing products. They drop price to send good performers into the stratosphere. (And 9to5mac has already heard rumors of carrier-subsidized iPad's in Europe -- can we imagine ).

Put the iPhone price drop curve next to the Apple TV price drop curve if you need any further convincing.


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Rene Ritchie

EiC of iMore, EP of Mobile Nations, Apple analyst, co-host of Debug, Iterate, Vector, Review, and MacBreak Weekly podcasts. Cook, grappler, photon wrangler. Follow him on Twitter and Google+.

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Reader comments

About that "Apple Could Drop iPad Price" Story


a subsidized 3g model seems like a good idea. i know most people hate contracts but if you get a 3g model your most likley have the service anyways. They should add a 1 year contract along with the standard 2 year

Ok, here's a novel idea. Why don't they raise the price, but add features people really want (camera, multitasking, high def (including HD video out), tethering (in the USA)?

I think if Apple put too many features in the iPad at this point it would endanger iPhone 4 sales in June/July. Although I agree the iPad needs more features, including the ability to make phone calls.

The price isn't going down before it is released. They will gouge all the fanatics and then see how the sales start to look a few months out. Although something like this the price might not change much until a new version comes out. Cell phone prices drop every other day. This isn't something that everyone is going to get or want. Before the iPod most had a walkman or CD player they carried around, dropping it's price made sense too entice people to give those up and get the iPod. By the time the iPhone came out everyone had/needed a cell phone, same deal. Drop the price to get it in range for more people who were going to buy a cell phone anyway.

Subsidized 3G is ok, as long as it's just an option alongside the outright price. It'd be $0 in that case.

I agree with a previous poster, I worked in brokerages for a while. They will drop them in price probably this time next year, it will drive revenue, and then they will deliver v2.

I was just about to mention the Apple TV. That hasn't seen too many price drops. LOL.
I have never really seen anyone drop a price just to help it sale unless they're clearing stock.
Most big name companies drop prices nowadays to make a popular product sell even more.

Ok. So there are people who are definitely buying this thing regardless of the price. And there are people who are definitely not buying this thing regardless of the price. And then there are those who aren't sure. They're the people on the margin. Some of those on the margin are leaning towards buying it, and some are leaning against.
Doesn't this strategy of announcing that price cuts could be coming really mess with those people on the margin? Don't they now have an incentive to wait? Meaning that the start will be slower than it would have been w/out the announcement. In other words, doesn't this announcement pretty much guarantee the slow start and lowered prices?

I don't think Apple would change the price points on the iPad, except perhaps for the 3G models. It would be more likely IMO for Apple to include more add-ons at the current price points: more storage capacity, accessories like the dock or the case, etc. It would be very easy to imagine Apple quickly dropping the 16GB version and just doubling the storage capacity at each given price point, for instance. The price points currently in place position the iPad right where it needs to be: between the Touch and the Macbook.

WS will spin this saying even Apple is not sure of the iPad. They have another two months to manipulate apple. Why Jobs allow these shysters to define apple, is beyond me.

Actually, I could see the 16GB iPad dropping to around the price of the most expensive Touch model. Why not?

I'm sure AT&T will subsidise the 3G-enabled iPads if you take a 2yr data contract. I predict they will sell it for $199, $299 and $399 for the 3G models in a few months time. ETF will be high to stop people signing up for the subsidised iPad and cancelling the contract straight away.