Jae Ah Ho's Blog

image taken from http://www.viralblog.com/mobile-and-iphone/ipad-2-compared-to-its-competition/

Thinner, lighter, two cameras for FaceTime, HD video recording, and more features, iPad 2 will be in the market on Mar, 11^th in the states and Mar, 25^th in Canada with listed features above. It is surprising that the price of the new iPad is going to start at $499, which was the same price for the first generation iPad.

Typically, Apple has been well known for skimming pricing (a.k.a. market-plus pricing), which is setting a relatively high price and reducing its price as competition increases. However, they adopted different strategy this time, which really surprised me. They could have charged a premium price with advanced features; however, they applied apply penetrating pricing (a.k.a. market-minus pricing), which is setting a low price to attract new customers and grow market share, for the latest technology.

It is safe to say that Samsung Galaxy Tab is the only competitor in the tablet market. Galaxy Tab is sold at $599 which is $100 more expensive than the iPad 2. By offering a high-tech product with a nominal price, Apple is able to get rid of the last competitor and take the whole market share. This is the Apple’s strategy behind the price.

Samsung must be astonished by not only the new features but also the price of iPad 2. Samsung has to step up to secure its market share, and it will definitely be the challenging task. Without doubt, Apple takes the big lead by introducing the new iPad. I would really love to see how Samsung reacts.