Monday, March 20, 2017

Apple iPad Pricing

If Apple is sincere in its stated belief that iPad is the future of personal computing (i.e., “PCs aretrucks”), Apple’s relatively low pricing strategy makes great sense.  Setting up an established base of users can create a virtuous circle of application development to defend against an assault by an alternative future.  And setting such a base up quickly makes sense if establishing that defensive wall is the goal.

I say "relatively" low pricing strategy as I know iPad prices are not low.  But they are lower than one might expect of Apple.  This is a company that still wants to make sure it makes money when it sells something and so maintains healthy unit profit margins.

To balance these competing goals (margin and scale), Apple must keep its prices realistic and this has resulted in a pace of advancement that is likely slower than what Apple is actually capable of (iPads could probably run macOS if they had to).  But that is fine if advancement isn’t necessary to grow the market or, put alternatively, if the market can be grown more quickly through price than with specifications.

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