Monday, November 14, 2011

iPad Demand Cooling?

Goldman Sachs analyst Bill Shope says iPad demand is slowing. "We believe it is prudent to assume the iPad is facing some near-term demand challenges," says Shope. To reignite growth, price cuts are required, he says.

“The iPhone enjoyed several major retail price cuts in its first year,” he says. “The 8Gb version of the first iPhone saw its retail price slashed from $599 to $399 in its first three months on the market.”

Similar price cuts occurred with the iPod throughout its existence, and both the iPhone and the iPod saw storage capacity increases with each product refresh. In contrast, the launch of the iPad 2 saw no increase in storage capacity across the SKUs and no price change, says Shope.

A price cut at the low end, and the possible introduction of a low-capacity iPad 2 line once the iPad 3 is released,  could stimulate demand considerably without any substantial margin compression, he argues.

It is possible demand is shifting a bit in the direction of e-readers, by some potential buyers, and towards Android tablets, by other buyers, one might suspect. Demand For The iPad Is Fading

It seems reasonable to suppose that iPad sales volume has been helped by business buying, something that probably did not happen so much with iPhones, which initially were not supported by enterprise information technology departments. 

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