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Apple execs ready to drop iPad pricing based on demand

updated 12:55 pm EST, Mon February 8, 2010

Initial wave may be determining factor

Apple has already acknowledged a willingness to drop iPad pricing, says Credit Suisse analyst Bill Shope. Shope notes that he recently met with Apple executives, who explained that iPad pricing could well change should the tablet not attract as many buyers as Apple is hoping for. While a 16GB, Wi-Fi-only iPad is initially set to cost $499, prices will range as high as $829 for a 64GB model with 3G. The first iPads go on sale in March.

The executives add that there is no worry about cannibalizing iPhone and iPod touch sales. The iPad may, in the future, prove better than both handhelds and notebooks for some tasks, including web browsing, media playback and using the App Store. But iPhones and iPods will still have their uses, the executives say, which leads Shope to argue that cannibalization is not as serious a concern as some analysts have implied.




by MacNN Staff

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  1. cmoney

    Joined: Dec 1969

    +3

    one rumor

    I think it was MacGruber at Daring Firball who mentioned there was a group of folks at the unveiling who were shocked and/or upset when they saw the $499 price point slide. Reason? They saw the original slides had $399 marked on it.

  1. Jonathan-Tanya

    Joined: Dec 1969

    +5

    no worries indeed

    "The executives add that there is no worry about cannibalizing iPhone and iPod touch sales. "

    There is generally zero worry about replacing a lower priced product with a higher priced product.

    The iPad is not a phone, so lets dismiss that, but if someone who currently has bought an iPod touch, really would prefer a larger screen, and buys an iPad next time around. GREAT!

    How could this be a worry? Just because the iPod touch was introduced before the iPad, doesn't mean a thing.

  1. MChieh

    Joined: Dec 1969

    +7

    WiFi/3G Pricing is what's wrong, not WiFi-only mod

    Personally I don't have a problem with the $499 pricing (better than rumors of $1,000 initially), it's the $130 increase when adding 3G capability to the model. But hey, I'm all for Apple dropping prices on all flavors of iPad. Why you're at it, please include a front-facing webcam as well before the product launches.

  1. MyRightEye

    Joined: Dec 1969

    -7

    If it had a camera

    And cell phone, not just 3G data, I'd pay $1000 without blinking.

    Until these two things are added, they're getting just $499 out of me.

  1. dliup

    Joined: Dec 1969

    +3

    rumor

    It's already very competitive. Do they dream that it'll be free?

  1. slider

    Joined: Dec 1969

    +3

    And another post

    I was just thinking this morning about how useless all these little bits of iPad news are, and yet here I am posting to yet another little bit of nothing.

    Better to aim high and drop the price than shoot low and raise the price tag. The former creates positive buzz, the latter, well, it could be riots in Cupertino ;)

    I don't know anything about the differences in chipsets - wifi only to wifi/3G - but it may be possible that part of the increased price is for a one-time cost for every iPad 3G sold going to AT&T - perhaps this was part of the prepaid aggressive pricing on the data plan.

    At the moment, I'm planning on purchasing an iPad and I'm eyeing the 32GB wifi only model. I believe I'll only be using the iPad in area's that have wifi. I don't need 3G access for both my iPhone and the iPad.

  1. macs4all

    Joined: Dec 1969

    +4

    3G Added Cost is MOSTLY LICENSING

    As has been pointed out in many other forums, not only is $130 not out of line for the addition of 3G in the industry (Dell charges $125, for example), people who keep whining about the fact that the 3G chip is only $20 fail to recognize that Qualcomm charges about $100 PER UNIT to license the "3G" communication protocols that they have patented. In fact, Nokia paid Qualcomm a cool ONE BILLION DOLLARS FOR 3G LICENSING FEES! Qualcomm said Nokia owed them MORE.

    http://www.phonescoop.com/news/item.php?n=3212

    So, the cost of the additional hardware (even disregarding the different case molding, cost for FCC (and other countries' equivalent agencies) approval, additional unit testing, etc.) in no way reflects the actual cost of adding 3G to a product.

    I sincerely hope that this will quash this meme once-and-for-all. But it won't. Paid shills are everywhere, trying to spread hate about the iPad.

    I think that Apple needs to get some prototype units into the Apple stores PRONTO, so that people can fall in love with the awesome experience that is iPad!

  1. OtisWild

    Joined: Dec 1969

    +3

    $100/unit licensing? Are you sure?

    http://www.maximumpc.com/article/news/apple_using_technicality_avoid_3g_license_fees

    "Licensees must pay 5% of the wholesale price of a 3G device to the patent owner. Qualcomm’s website lists over 145 companies that have licensed their 3G technology. The list includes all major makers of 3G handsets. The one notable exception? Apple. One surprise on the list is Foxconn, the Taiwanese manufacturer of the iPhone.

    The Bernstein report says that Qualcomm is being paid royalties not on the price Apple charges (average $590), but on the unit price Apple pays Foxconn, a mere $244. So instead of making $23.60 per iPhone, Qualcomm is only seeing $9.70. Apple is able to get away with this because the entire manufacturing process is done externally. Qualcomm seems fine with the arrangement. After all, $9.70 per iPhone is pretty good considering how they fly off the shelves."

    5% of the wholesale price of $499 (call it $399) is not $100..

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