Apple is the most dominant tablet maker in the industry. The company sold more than 15 million iPads during the fourth quarter, and secured an unbeatable share of the tablet space. All other companies are left to pick up scraps that, in the coming years, Apple might just try and grab. To say that the companys iPad is a huge success, at this point, would be an understatement.
However, Apple is feeling some pressure from Amazons Kindle Fire. The 7-inch, Android-based tablet cant keep up with the iPad on power or features, but its $199 price tag is attractive to consumers. Realizing that, Barnes & Noble recently announced the launch of the 8GB Nook Tablet for the same $199 price tag. Chances are, in the coming months, more companies will follow suit and try to severely undercut Apple on price.
But perhaps the time has come for Apple to throw a curveball. Rather than allow Amazon and Barnes & Noble to feed on the bargain end of the tablet market, Apple should deliver its own $199 iPad. It wont be able to match the iPad 3, of course, but it could put its chief competitors on their heels. And in the highly lucrative tablet space, doing so is a very, very good move.
1. Everyone else is doing it
In the tablet space, it seems just about every company is trying to bring prices down to match the Kindle Fire. As noted, Barnes & Noble has done it, and other companies are expected to follow suit this year. If $199 is the new sweet spot for tablet pricing, Apple should want to be there.
2. Its the unexpected
Apple likes to do things that the market doesnt expect. Why shouldnt the company do it this time around with a $199 iPad? For years, Apple has been the provider of an expensive tablet, despite the market seemingly wanting a cheaper device. Its about time Apple does something in the tablet space that no one–including Apples own, loyal fans–expect.
3. It has the iPad 2 ready to go
In the past, Apple has delivered new iPhones, but kept earlier models on store shelves at reduced prices. Its doing it right now with the iPhone 3GS and iPhone 4. The company should consider doing the same with the iPad 2. Its not clear if Apple would be able to get down to $199 on the iPad 2, but it could get close.
4. It wont hurt iPad 3 sales
Apples iPad 3 is expected to be unveiled in early March. And when the device is announced, it could come with a host of major improvements, including a Retina Display and a quad-core processor. Although a cheaper iPad might, at first glance, seem to hurt the iPad 3s sales, its highly unlikely thatll happen. A $199 iPad and the iPad 3 are targeting two very different customers.
Its About Time Apple Addresses the Budget-Conscious Customer
5. Its working with the iPhone
If Apple offered a cheap iPad, it wouldnt be unprecedented. The company and its carrier partners are giving away the iPhone 3GS for free, and the iPhone 4 is being sold for just $99. And those devices, along with the full-priced iPhone 4S, are selling exceedingly well. If it works with the iPhone, why wouldnt it work with the iPad?
6. Price matters
Like it or not, price matters in todays mobile market. The Kindle Fire is successful solely because it comes in at a price that makes consumers care. If the device were $499 like the entry-level iPad, it would fail. Apple has succeeded at the upper echelon of the tablet market, but its about time it succeeds at the budget-conscious level, as well.
7. It doesnt devalue the brand
Apple is obsessed with not doing anything that might devalue its brand. In the past, thats meant offering products at a significant discount. But since the iPad 3 will be on store shelves at the full price, Apple wouldnt devalue its brand by offering a $199 iPad. In fact, it might only improve its brand.
8. Consumers will buy itin droves
At the end of the day, companies make decisions that they believe, will increase sales. Given that, and considering the importance of price today, theres no reason to suggest consumers wont flock to the $199 iPad. Right now, there are many folks that havent been pushed to buy a tablet. An iPad running iOS 5 for just $199 could get them to change their minds.
9. Think of it as a gateway device
The nice thing about bringing more consumers into the iOS game is that they might eventually buy the more expensive iPad 3, Macs or even invest in an iPhone. As history has shown, once Apple gets customers to buy some of its products, they usually want to buy them all. It could apply that same principle to the $199 iPad.
10. Consider the content upside
Selling hardware is obviously central to Apples business, but the companys huge profits are due also to its ability to sell content. From apps to music to movies, Apple is offering solutions that it generates all kinds of cash from. Although it might sell the $199 at a loss or at cost, it could quickly make that up with all the revenue it was generating from app and iTunes sales.