In a move that has surprised many, Apple has announced in advance that it willhave a sale on its rarely discounted products the day after Thanksgiving in the U.S., otherwise known as Black Friday. Normally, the only time Apple reduces prices on its products is immediately before a new version of the product is about to come out-so that it can clear inventory-and after the new product arrives, as it did with the iPhone’s older models.
But it’s not just Apple that’s reducing prices on iPads, iPods and related items. Retailer Microcenter is advertising iPads for a $50 discount in its newspaper ads (but not online). I haven’t done an exhaustive search since I don’t plan to buy an iPad on Black Friday. (I already have one.) But the discounting by Apple and major retailers is a strong indicator that Apple is concerned enough about keeping its market share intact that it’s reducing the price on its most in-demand products, and letting its authorized retailers do the same.
This should be no surprise to Apple customers. When the word got out late this past summer that Apple would be introducing its long-awaited iPhone 5 in early October, sales of the iPhone 4 dropped significantly. In fact, the drop was so great that Apple temporarily dropped its leadership position in market share. Clearly, the company doesn’t want this to happen again.
To protect against what I’ve started calling the “September Effect,” Apple is taking moves to keep its market share up, and its competition on the ropes. This is especially important in this time at the beginning of the Christmas shopping season when many companies make their biggest profits of the year. This year is especially important because Apple has a lot of competitors, at least in the laptop and tablet markets.
It’s in the tablet market where Apple faces the hardest market share fight. Both Amazon and Barnes & Noble have started selling e-readers that look a lot like tablets. In addition, Samsung has introduced a new version of its Galaxy Tab that competes directly with the Apple iPad. And, of course, there are about a gazillion Android tablets out there soaking up consumer dollars.
While the e-readers from Amazon and Barnes & Noble aren’t tablets in the same league as the iPad, they are competitors in the sense that shoppers, who might have purchased an iPad as an e-reader, will now decide the new Kindle Fire or Nook Color will do just as well for less money. The tablet-like e-readers are really aiming at a separate market from the iPad, but they still cost half as much, and fill some of the same needs.
Black Friday Sales Will Bolster Apple Market Share
Meanwhile, Apple faces an additional problem. It’s no secret that an iPad 3 is due sometime in 2012, perhaps in the spring. While Apple isn’t saying much about the new device, one can safely assume that it will be thinner, lighter, have greater resolution and will probably feature a faster processor.
The iPad 3, whenever it ships, will also cost the same as the iPad 2 does now. It’s unclear whether Apple will keep selling the older iPad 2 as it does with older iPhones, but when the iPad 2 came out, the original iPad vanished from Apple’s shelves.
The question is whether Apple’s Black Friday sale will sell enough iPads to keep market share up when every other tablet maker is doing the same thing. I think the answer is that Apple will accomplish its goal for a couple of reasons. The people who are buying iPads now aren’t the early adopters, and they aren’t Apple fans. These people probably don’t know anything about the pending iPad 3 and probably wouldn’t care if they did know. These are people who want an iPad, and only an iPad will do. Saving the 50 bucks or so on Black Friday is probably enough to nudge many of them off the fence.
So Apple will have a great day on Friday. But so will Amazon and Barnes & Noble. While it’s unlikely that their e-readers will be on sale, it’s likely that the content for them will be. At the same time, these products are new enough that they’re just now finding their customer bases, and because they are so cheap, they’ll sell well in any case.
The only other question is whether iPads and other tablets will sell well after Black Friday is gone. Chances are, they will. The Black Friday pricing is enough to motivate people unsure of whether they wanted to spring for the bucks to buy an iPad, but for most people, $50 isn’t enough to make or break a sale. It’s more along the lines of something that’s nice if you can manage it, but not a deal-breaker if you can’t. It’ll be a nice shopping season for Apple, but the new discounts will only make it better.