Friday, January 29, 2010

Apple iPad's pricing strategy

It is interesting to see how Apple priced its iPad.

Apple made a suprising announcement to price its entry level of iPad at USD499. This entry level price broke all predictions on the iPad Pricing that I have come across.

Most analysts, including myself (I am not analyst but I was predicting for the fun of it)- thought that Apple may be looking at the price of USD699 to USD799 instead.

Shortly before the anouncement on prices during the event held in San Francisco on Wednesday, I was shouted in my tweets that it is probably starting at USD499.

Why do I have such a feeling that it may be USD499 instead? I judged from the live demos during the event:

Steve Jobs highlighted that iPad is positioned to fill the vacumm between smartphone and laptop, and he went on and classified netbook as "cheap laptop with inferior display and build quality".

He has clearly mentioned Apple's ambition to shake the netbook market using iPad.

Second, Steve mentioned that iPad intended to excel in the areas like web browsing and emails, directly attacking the main reason people buying netbook.

Of course other features like iPod, iBooks, and movies experience are highlighted, but this can be replaced with other devices without considerable limitation.

Take iPod for example, using iPad to play music is no different from using iphone, iPod, or any mp3 players in the market.

To me, these are secondary as there are replacement where iPad is not THE device.

Of course, games is one of the target area too for iPad due to its large format display compared to other portable games consoles.

So how much is an average netbook cost? From USD299 up to USD999, and most of them are priced within USD500.

You may argue that netbook can do more bacause it is a full featured personal computer while iPad is just a large, boosted iPod. I bet you are wrong!

It is right that netbook runs so called full fledged OS, but running full-fledged OS does not mean that it can get the tasks done.

It is rather a misconception of people believing that if you get something that's mainstream, you won't go wrong.

When Apple showed its iWork on iPad and subsequently announcing the price, it is already clear that Apple hit hard at the bull eye - why Must you use Powerpoint costing hundreds of dollar that you can opt for Keynote on iPad for a mere USD9.90?

Apple's software pricing strategy is probably inspired by unprecedented success of its own AppStore, where apps are ridiculously priced at 0.99 onwards.

I will come back on AppStore if I have time to write my thoughts.

Let's come back to iPad. The mission for iPad as far as Apple is concern, is to fill the in between, and forcing competitors, direct or indirect, to dance with Apple's music. Clearly, Apple raises the bar on expectation and manages it pretty well.

It is interesting to see how many of the entry level iPad is sold, or will it be just like iPhone where most will go for top of the range instead.

The question now is how Market is going to react, from both consumers and competitors.

-- Post From My iPhone

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