Before the iPad launched it was rumored to cost $1000. When Steve Jobs announced it at an Apple special event in 2010, the starting price ended up being $500. Given the expectation and the presentation, the price sounded great. Now, following the latest iPad event, and the introducing of the iPad Air and Retina iPad mini, there are grumblings that the price is too high. That Apple is blowing it. In a short, but very worthwhile blog post today, independent analyst and consultant Benedict Evans published his thoughts on iPad pricing.
If you take a look at the iPad sales table in his piece, you’ll see what appears to be a scary story. iPad volume has been falling slightly, but all of this has been happening while Android tablet volume has risen tremendously. Knowing that Android tablets are significantly cheaper, it can lead to the belief that the iPad is starting to fail because it isn’t price-competitive any more.
But here’s the kicker: A huge chunk of the Android tablet volume is in the form of $75-100 units sold in China, according to Evans. The people who buy these, he suggests that:
They're being used for a little bit of web, and a bit of free gaming. Perhaps some book reading. And a LOT of video consumption. In fact, one might argue that for many buyers, these compete with TVs, not iPads, Nexuses and Tabs.
He concludes by saying there are really two quite different markets. You have what he calls the “post-PC vision”, where Apple is clobbering Microsoft, and where people looking to marry PC with mobile are choosing Apple. And you have the ultra-low margin product that still carries the “tablet” label, but Evans considers a totally different product.
I have to say, I think he makes a great point. Apple isn’t competing with cheap Chinese tablets. Apple is making the post-PC world fun and easy. I’m happy to pay an extra $1-200 for a tablet that makes my life more fun and simple.