The hottest gadget of the year is probably the Ipad 2, which will be released this friday on March 11th. And with a shockingly low starting price of $499, Apple leaves little or almost no margins for their competitors such as Motorola and Samsung. Motorola’s Xoom for instance, costs $799. Apple is clearly pushing all the pricier rivals into a corner by offering the lowest price in the tablets market, but why?
1. Avoid any pricing fiasco like the iPhone. Apple launched iPhone at $599 and had to lower the price to $399 within two months. And also, this will make the iPad 2 more affordable to more customers.
2. Introducing a new category of products. Apple is launching a new category of products. There really is no demand for tablets except when Apple started introducing this new product. Therefore, I believe that Apple is sales-oriented as they set their prices, since low price is the best way to attract customers to try it.
3. Low starting price to lure customers to visit Apple store and try it out; customers are likely to end up buying the high-end model that costs $829, given their brand loyalty for Apple.
4. Apple is more about generating revenue in the long run. Just like the iPhone, iPad will generate revenue from AppStore, advertisers, and wireless providers.
