Why iPad costs less than new rivals

Feb 21, 2011
Finance

Presidents Day is famous for sales. Lay down your dead Presidents for linens or shirts. But app fans, don’t expect any deals on tabs, not now or in the future. You might expect the invasion of the tablets to drive down prices, pressuring Apple (AAPL) to lower the price on its market-leading iPad. But Apple […]

Presidents Day is famous for sales. Lay down your dead Presidents for linens or shirts. But app fans, don’t expect any deals on tabs, not now or in the future.

You might expect the invasion of the tablets to drive down prices, pressuring Apple (AAPL) to lower the price on its market-leading iPad. But Apple appears to be feeling no pain nor pressure because the new tabs are turning out to be more pricey than the iPad.

Jason Hiner reports in TechRepublic: “The Motorola Xoom – the flagship Android tablet – will cost $800 ($600 for the Wi-Fi model). The HTC Flyer will reportedly cost around $700 and it’s only a 7-inch tablet (compared to the 10-inch iPad). Another attractive 7-incher is the BlackBerry PlayBook, but it’s likely to cost about the same as the iPad while offering very few advantages. The Hewlett-Packard TouchPad based on Palm’s webOS looks like an excellent alternative, but will reportedly cost $700.”

TabletPCReview.com notes that the BlackBerry tab will come in at $499.99, adding this outs it at “exactly the same price point as Apple’s iPad with the same amount of storage. RIM (RIMM) is also offering 32GB and 64GB PlayBooks, and if its price structure continues to mirror Apple’s, the versions with more memory could be expected to cost $600 and $700, respectively.”

Hiner described it as a “sad little ritual” for Apple rivals to march out their promising tabs, which attract consumer interest until the price tag leaks out, leaving consumers to “gasp in confusion and disappointment.”

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What’s the Apple advantage?

Hiner said: “I’ve heard a lot of reasons thrown around, from buying flash memory in bulk to Apple’s strength in supply chain management to the fact that Apple now has its own line of CPUs. However, nearly everyone seems to be missing the biggest and most obvious reason: The Apple Store.”

He maintained Apple has been cutting out the mark-up from middlemen though its more than 300 brick-and-mortars, plus its online store.

The competition has to settle on selling wholesale to retailers, he said.

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