iPad Faces Pricing Challenge

Two thirds of people who are thinking of buying an iPad in the next 12 months are expecting to pay less than the current lowest retail price, according to Strategy Analytics. About 66 percent say they will pay less than $500 or €500, and half of those say they want to pay less than $300 or €300.

Strategy Analytics surveyed nearly 5000 consumers across the United States and four major European markets as part of the study.

One might draw several conclusions. Consumers already are conditioned to expect price declines for any digital appliance over time. They already expect to see "newer" models, every year or so, that maintain current prices for models with new features, but also expect current models to be sold at lower prices.

But the findings might also illustrate demand for lower-cost alternatives. Given Apple's historic emphasis on selling at premium prices, that would also suggest there is a relatively-big market for lower-cost tablets. Though the analogy is not exact, one might point to an eventual market where Apple has less share, but more share at the high end of retail pricing, while Android devices have more of the market overall, and dominate in the "value" and mid-range parts of the market.

Already we are seeing a proliferation of (mostly Android-based) tablets arriving on retailers’ shelves, often at iPad-undercutting prices. Staples is offering a 10″ Viewsonic, Android 2.2 device at $400.

iPad Faces Pricing Challenge