Rivals struggle to beat iPad in price
The iPad 2 offers several sleek improvements over its predecessor. But its most attractive feature is perhaps the price tag of $499. And what makes that feature even more compelling is that so far, Apple’s competitors in tablets cannot beat or even match it.
Competitors include Motorola Xoom, Samsung Galaxy Tab, Hewlett-Packard TouchPad, HTC Flyer, LG G-Slate and the BlackBerry PlayBook.
But prices, or even release dates, have not been announced, and industry experts said it was not yet clear whether the devices can be competitive with Apple on price. “There have been nearly a hundred tablets that have been introduced since the iPad,” said Toni Sacconaghi, analyst, Sanford C. Bernstein. “But it seems that no one has eclipsed or even matched Apple on pricing.”
Analysts and industry experts point to a number of reasons. Primarily, they say, Apple’s deep pockets — a staggering $60 billion in cash reserves — have allowed it to form strategic partnerships with other companies to buy large supplies of components.
Apple also sidestepped high licensing fees for items like processors within iPads. The parts, designed in-house at Apple by a firm that Apple bought, are among the costlier components needed to make a tablet computer.
Apple also could subsidise some of the cost of building iPads with the money it makes through App Store, which generates more than a billion dollars each year. This means that Apple can take a lower profit margin on the iPad.
Another advantage is Apple’s wide net of its own global retail shops and online stores.
Others have some of these factors in their favour; Apple has all of them.