ipad price cut sparks war.

Sunday Tasmanian - Tassie Living - - Front Page -

Jen­nifer Dud­ley

Ni­chol­son THERE’S a price war brew­ing over tablet com­put­ers and it does not in­volve Ap­ple’s new ipad.

While re­tail­ers fought to of­fer the big­gest dis­counts at the tablet’s re­cent launch, a big­ger mon­e­tary bat­tle is emerg­ing that could de­cide the fate of the in­dus­try.

An­a­lysts have la­belled Ap­ple’s decision to lower the price of its ipad 2 a ‘‘ mas­ter­stroke’’ and a move that could have wider im­pli­ca­tions for its com­peti­tors.

Ap­ple’s en­try- level tablet now costs less than $ 400 in some stores, a price cut Gart­ner re­search vice- pres­i­dent Van Baker says could see its ri­vals re­think cur­rent prices and should see Google seek to en­hance its tablet ap­peal.

There’s lit­tle doubt Ap­ple’s third ipad is mak­ing an im­pact on tablet sales.

Aus­tralian pre- or­ders sold out be­fore its launch, push­ing de­liv­ery dates back by up to three weeks.

Piper Jaf­fray an­a­lyst Gene Mun­ster pre­dicted the com­pany would have sold more than one mil­lion on its first day on sale and re­search firm Canac­cord Ge­nu­ity re­vised its an­nual ipad sales es­ti­mates up­wards.

The com­pany pre­dicts Ap­ple will sell 65.6 mil­lion ipads this year, up by 10 mil­lion.

‘‘ We be­lieve Ap­ple has ex­tended its lead­er­ship po­si­tion in the fast- grow­ing tablet mar­ket,’’ it fore­cast in a note to in­vestors.

‘‘ We be­lieve the new ipad has raised the bar rel­a­tive to com­pet­ing tablets.’’

But a close sec­ond to the im­pact of the new ipad is the price of the old model.

When re­veal­ing the new gad­get, Ap­ple an­nounced it would con­tinue to sell the ipad 2 at a re­duced price, start­ing from $ 429, an overnight re­duc­tion of $ 150.

Fur­ther dis­counts by re­tail­ers in­clud­ing Big W and Dick Smith have put the tablet com­puter un­der the $ 400 mark for the first time.

Tel­syte re­search di­rec­tor Foad Fadaghi says the lower price is likely to at­tract many new cus­tomers, from first- time tablet buy­ers to those up­grad­ing from older mod­els.

It could have an even greater im­pact on Ap­ple’s com­peti­tors, Fadaghi says, who could now be led into a price war.

‘‘ It’s a mas­ter­stroke, re­ally, be­cause it en­sures Ap­ple gets the max­i­mum amount of value from an ex­ist­ing model, even though it’s out­dated, and it re­ally hurts the com­pe­ti­tion,’’ he says.

‘‘ Now ri­vals re­ally have to coun­ter­act Ap­ple’s move with price drops. At this rate, we could see some very low- priced de­vices, maybe even older mod­els that come down to a $ 150 price point.’’

Fadaghi says Aus­tralian tablet buy­ers have al­ready proven to be very price- sen­si­tive, many opt­ing to in­vest in en­try- level ver­sions of ad­vanced tablets or bar­gain de­vices.

‘‘ Tel­stra has proven that there is a place for low- priced tablets with their T- Touch Tab,’’ he says.

‘‘ By its own ad­mis­sion it was not a ter­ri­bly good prod­uct but it sold be­cause of its [$ 299] price point.

‘‘ Peo­ple are not think­ing about us­ing a tablet like that for two years and they’re not wor­ried about the ef­fect on their bud­get. It be­comes a dis­cre­tionary item.’’

Gart­ner’s Baker says the price cut sends a sim­ple mes­sage to Ap­ple ri­vals: ‘‘ If you’re go­ing to com­pete with us you’re go­ing to have to match us on price.’’

Many new Google An­droid tablets, in­clud­ing mod­els from Mo­torola, Sony and Sam­sung, have been launched with prices over $ 700, match­ing the ipad 2’ s old price but not its new cost. But that could change.

Baker pre­dicts Google An­droid tablet mak­ers will lower prices to meet the mar­ket, but he says the fu­ture for Ap­ple’s ri­vals could be in the cheap range dom­i­nated in the US by Ama­zon and its $ US199 Kin­dle Fire.

‘‘ Ama­zon chose to make a smaller, cheaper de­vice that ap­peals to a dif­fer­ent seg­ment of the mar­ket, so it’s only slightly com­pet­i­tive with the ipad,’’ he says.

In ad­di­tion to price cuts, Baker says ri­val tablets will also need more full- screen apps to com­pete with Ap­ple, and Google may need to pitch in to build the plat­form.

‘‘ We’re in a bit of a chicken- or- the- egg sit­u­a­tion right now with An­droid tablets be­cause de­vel­op­ers don’t want to build apps for An­droid if there is no in­stall base and peo­ple don’t want to buy an An­droid tablet if there are no apps to in­stall on it. The only en­tity who can do any­thing about that is Google,’’ he says.

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