Apple IPad Debut Shows No Fear of Rivals’ Lower Prices
Apple Inc. (AAPL:US) isn’t acting worried about competition for the iPad.
Even as rivals such as Amazon.com Inc. (AMZN:US), Samsung Electronics Co. andGoogle Inc. (GOOG:US) introduce tablets at cheaper prices, Apple Chief Executive Officer Tim Cook went in the opposite direction yesterday. He unveiled a new iPad mini with a high-definition screen that starts at $399, $70 more expensive than last year’s model. Apple also introduced a lighter and thinner design for its larger tablet, renamed iPad Air, starting at the same price of $499.
The new iPads follow the debut of the iPhone 5c last month at a heftier price than analysts expected, underscoring how Apple is appealing to the higher end of the market where more profit is made. The Cupertino, California-based company is betting customers see its products as a unique mix of hardware, software and services that are more valuable than lower-cost alternatives.
“You can see from the pricing decision that Apple doesn’t really fear much competition,” said Benedict Evans, an analyst at Enders Analysis, who attended Apple’s event in downtown San Francisco yesterday.
Apple’s top marketing executive, Phil Schiller, said the company sees the tablet market bifurcating. On one end, Apple is focused on delivering high-quality devices, while the other has lower-quality devices and faces more pricing pressure, he said.
Schiller added that the iPad mini’s increased price is mainly the result of steeper costs for the new high-definition screens. Apple also dropped the price of last year’s iPad mini model to $299.
Crowded Market
Apple’s new iPads, which will be shipped next month, are debuting in a crowded market where companies including Samsung, Asustek Computer Inc., Google and Amazon have unveiled tablets, often at lower prices. The competition ramps up pressure on Apple because the iPad is its second-largest revenue source after its flagship iPhone. Success of the new models is critical as the company attempts to reignite revenue growth, which has slowed.
Apple’s new iPads, which also include more powerful processors and faster wireless speeds, are part of a broad product update ahead of the lucrative holiday shopping season. The company released the new iPhone 5s and 5c last month.
“We couldn’t be more pleased to introduce all of them to you in time for the holidays,” said Cook.
Many Macs
Apple also announced that it will for the first time start giving away its Mac software for free, starting with the latest release called Mavericks that was available for download yesterday. Apple’s productivity software, including iPhoto, iMovie and Pages, also are being made available for free. And the company showed an updated high-end Mac Pro desktop computer aimed at professions that need extra computing power, as well as new MacBook Pro laptops.
“Last month was all iPhone and this was everything else,” Carl Howe, an analyst with Yankee Group, said after the event.
Apple shares fell less than 1 percent yesterday to close at $519.87 in New York, leaving the stock down 2.3 percent for the year, compared with a 23 percent increase in the Standard & Poor’s 500 Index.
Apple’s challenge with the iPad is similar to what it faces with the iPhone. Rivals are introducing devices based on Google’s Android software that are cheaper.
Samsung, Asustek, Lenovo Group Ltd., Acer Inc. and others are offering tablets with prices starting at less than half of the iPad mini’s previous starting cost of $329. Amazon.com introduced new Kindle Fires last month with higher-resolution screens at prices starting from $229, while Microsoft Corp. and Nokia Oyj took the wraps off new tablets this week.
Falling Share
Amid the competition, Apple’s tablet market share slid to 32 percent in the second quarter, compared to 60 percent a year earlier, according to IDC.
In addition, more than three years after Steve Jobs unveiled the iPad, the growth of the global tablet market is showing signs of decelerating. Tablet shipments are projected to increase 28 percent in 2014 to 301 million units, after doubling in 2012, according to Counterpoint Research. Apple for the first time sold fewer iPads last quarter than it had in the year earlier period.
Cook alluded to the competition yesterday, noting “everybody seems to be making a tablet.”
No comments:
Post a Comment