Make us your home page
Instagram

Column: Apple loses its way on pricing for new iPads

Apple still knows how to create compelling products. But it seems to have forgotten nearly everything it ever learned about pricing such products for mainstream consumers.

The company's new iPads, unveiled Tuesday, look great and include some exciting new features. But the pricing of the company's iPad line as a whole is absurdly high, with Apple's models often costing at least $100 more than their closest rivals.

You know things are out of whack when the best-priced iPad still costs $500 and Apple is offering a 21/2-year-old model for $40 more than a comparably sized — but brand new — Samsung tablet.

Apple, of course, has a reputation for offering expensive products, and company executives have repeatedly tried to position its brand as a premium one. Apple's Mac computers remain pricey compared with their PC rivals, and its iPhone isn't cheap, particularly without a hefty carrier discount.

But the company's history tells a more complicated story than its reputation would suggest.

Apple's iPod line was consistently priced aggressively compared with its rivals, and Apple developed lower-cost models to compete in the lower-priced segments of the market, rather than conceding them to the competition.

When Apple introduced the original iPad with a starting price of $500, many observers were blown away that it would charge that little, as some had speculated that the device would cost as much as $1,000.

Even with the iPhone, which initially carried a hefty $500 price, Apple found a way to reach mainstream consumers, persuading AT&T to subsidize it so consumers paid a much more palatable $200 up front.

But lately, the company seems to be going back to its pricey ways.

Before Apple introduced its new iPhones last month, it was rumored to have a low-cost model in the works, one that could be broadly affordable even without a carrier discount. Instead, the company unveiled the iPhone 5C, a repackaged version of last-year's iPhone 5, that carries a $550 unsubsidized price. You may not be surprised to hear that according to numerous reports, the 5C is selling poorly and several retailers have already offered discounts on it.

Yet Tuesday's event offered more of the same. Apple kept the $500 base price on its flagship model, now dubbed the iPad Air. While that price used to be a bargain, it's increasingly looking expensive, especially when you can get Google's Nexus 10 for $400 and Samsung's Galaxy Tab 3 10.1 for $360. But it's at least defensible; the big iPad is still the best full-size tablet out there, and the changes Apple made to it — adding a 64-bit chip and giving it a much thinner and lighter case — appear to have made it even better than before.

Bafflingly high prices

But the prices on the other iPad models are simply baffling. Instead of marking down last year's fourth-generation iPad as a lower-priced full-size model, Apple decided to drop that model and continue producing the iPad 2. And it will continue to sell the iPad 2 for $400.

That's a crazy price, considering the cost of the Nexus 10 and the Galaxy Tab 3 — brand-new Android models with better specifications. And it also seems obscene when you consider that the iPad 2 debuted in February 2011 and could be ineligible for updates to its operating system as early as next year.

The prices Apple slapped on its iPad Mini models are just as bewildering.

When Apple introduced the Mini last year, the device had three obvious drawbacks: It had a relatively low-resolution screen and an older processor, and at $330, it cost about $100 more than its competitors.

This year, Apple fixed the screen and processor shortcomings. The new Mini has one of Apple's high-resolution Retina displays, and the company included with the Mini an A7 chip, which is its latest and greatest processor.

If Apple had kept the Mini's price at $330, those upgrades might have justified its price. But instead, Apple raised the price on the Mini to $400.

Mind you, you can get Google's Nexus 7, which has a similarly high-resolution, if smaller, screen and a similarly fast processor for just $230. And Amazon charges the same price for its brand-new 8-inch Amazon Kindle Fire HDX.

Apple's prices would make sense if the company were still dominating the tablet market. But its market share has plunged and its tablet sales actually fell last quarter from the same period a year earlier.

Column: Apple loses its way on pricing for new iPads 10/23/13 [Last modified: Wednesday, October 23, 2013 9:15pm]
Photo reprints | Article reprints

Copyright: For copyright information, please check with the distributor of this item, Tribune News Service.
    

Join the discussion: Click to view comments, add yours

Loading...
  1. Shares in Tampa's Health Insurance Innovations rebound from stronger earnings report

    Corporate

    TAMPA — After a sharp drop in its stock price in August and September, Health Insurance Innovations on Monday announced strong revenue and net income gains in preliminary numbers for its third quarter of the year. The company also announced a $50 million stock buyback over the next two years meant to bolster its …

    After losing more than half its market value between August and September, shares in Tampa's Health Insurance Innovations are rebounding."The new share repurchase program underscores our confidence in our business strategy, financial performance, and the long-term prospects of our company while also allowing us the financial flexibility to continue to invest in our business," company CEO Gavin Southwell announced Monday. [Courtesy of LinkedIn]
  2. Trigaux: Campaign aims to leverage tourism ads to recruit millennials, businesses

    Economic Development

    TAMPA — Tampa Bay's unleashing one of its best weapons — a cadre of successful entrepreneurs and young business leaders — in a marketing campaign already under way but officially …

    Erin Meagher, founder of Tampa coconut oil products company Beneficial Blends, is part of a group of business savvy millennial entrepreneurs and managers who are helping to pitch the work-live-play merits of the Tampa Bay market in a new marketing campaign called Make It Tampa Bay. The campaign is backed by Visit Tampa Bay and the Tampa Hillsborough Economic Development Corp. and aimed at recruiting more millennial talent to relocate and stay in the Tampa Bay area. [Courtesy Tampa Hillsborough EDC, Visit Tampa Bay]
  3. Florida gas prices drop 25 cents on average over past month

    Autos

    Gas prices are on a downward tear post-hurricane. Tampa Bay fell to $2.34 per gallon on Sunday, down 10 cents over the week, according to AAA, The Auto Club Group. Across the state, gas fell 7 cents over the same period to average $2.47 per gallon.

    Gas prices across the state fell 25 cents over 31 days. | [Times file photo]
  4. Entrepreneur expands interests with Twisted Crafts

    Business

    SOUTH TAMPA — Playgrounds of Tampa owner Mike Addabbo is expanding into the do-it-yourself industry with his new endeavor: Twisted Crafts.

     Jennifer and Michael Addabbo pose in their latest entrepreneurial enterprise: Twisted Crafts. Photo courtesy of Twisted Craft.
  5. Amazing Lash franchise expands to South Tampa

    Business

    SOUTH TAMPA — Jeff Tolrud opened the doors to his third Amazing Lash Studio franchise earlier this month, this time in South Tampa.

    When customers walk in, the studios have the same look and feel throughout the country, operator Jeff Tolrud said of Amazing Lash Studio. Tolrud opened his third in Hillsborough County earlier this month. Photo courtesy of Amazing Lash.