Now that the Amazon Kindle Fire tablet has launched with a price tag of $199 and the Barnes & Noble Nook Tablet retails at $249, many people say that the time has come for Apple to rethink its tablet strategy and drop the price of the iPad 2 to bring it more in line with its chief competitors.
The argument is that that by doing so, Apple could more effectively fend off the looming competitive challenge from lower-price competitors,especially Amazon's Kindle Fire.
But that argument makes little sense. The fact is, the iPad 2 is already successful at its $499-and-up price tag and to think that a cut of, say, $100 or $200 would make a difference is nonsense. Simply put, Apple's iPad 2 is successful at this more expensive price and it doesn't need a price cut to remain successful. In other words, a price cut couldn't matter one bit either way.
Read on to find out why an iPad 2 price cut wouldn't have any impact on the tablet market.
1. Sales are already strong
At $499 and up,the iPad 2 is already selling exceedingly well at retail. So, if it's successful now, what makes anyone think that after dropping the price, and thus perhaps bringing even more consumers into the tablet market, it wouldn't still stay on top? Whether or not Apple drops the price of the iPad 2, the tablet will continue to top the charts.
2. The iPad 2 will still be more expensive
There's no way Apple can drop the iPad 2's price to $199. Therefore, the device will still be more expensive than the latest tablets to hit store shelves. That being the case, nothing would change. Apple would still be offering the premium product and companies like Amazon and Barnes & Noble would be selling the cheaper options.
3. All others will follow suit
Let's say that Apple does drop the price of its iPad 2 to make its tablet more attractive to shoppers on a budget. Within days, the vast majority of its competitors, including Samsung and Barnes & Noble, would cut the price of their offerings as well. After all, their current pricing seems to indicate they are comfortable with the price point they have established and they are likely to move their prices to maintain their price position relative to the iPad 2 no matter how Apple prices it.
4. Who knows if the Kindle Fire will be a success?
All this talk of Apple being forced to drop the price of the iPad 2 or face trouble in the tablet marketassumes that the Kindle Fire will be a success. Given the tablet market's history, there's no telling if the Kindle Fire can succeed where so many others have fallen short. Whether or not Apple cuts the iPad 2's price, other tablet vendors, with the possible exception of Amazon with the Kindle, have yet to score a mass market success.