Media Opinion: The Price of iPad and iPhone Must Be Reduced!
Henry Blodget, the editor-in-chief of Business Insider, wrote that the iPad could never turn Apple into an "iPad Company." Focused on short-term profits, Apple has handed over the mobile market to Android. In the long run, this will inevitably weaken Apple's position in the mobile market.
### Premium Strategy
The new iPad is about to be released, but it’s not coming soon enough. Some supporters believe that iPad sales will continue to grow exponentially and may eventually surpass iPhone sales, turning Apple into an "iPad Company."
In reality, this theory cannot hold water. Despite the release of the more affordable iPad mini last year, the growth momentum of Apple's iPad sales has started to slow down. In Q2 this year, iPad sales dropped by 14% year-over-year to just 15 million units. Even without considering inventory issues, iPad sales still fell by 3% year-over-year.
More notably, the tablet market is expected to grow by around 50% this year. As a completely new product category, many people thought that the iPad would drive Apple's growth for the next few years.
Of course, such comparisons might not be scientific. The Retina display iPad was officially launched in Q2 last year, which significantly boosted iPad sales in that quarter. This undoubtedly raised the benchmark for comparison in Q2 this year. However, this is not the main reason for the decline in iPad sales.
The primary reason for the drop in iPad sales is that more and more competitors are selling high-quality similar products at lower prices, while Apple continues to sell iPads at higher prices. Simply put, the iPad is too expensive.
This "premium" strategy runs counter to the one Apple used for the iPhone and earlier versions of the iPad. This strategy also caused Apple's failure in the PC era when Mac computers were also very expensive.
### You Can't Have It All
The iPad mini and iPad remain the best in their class, and they are also the most expensive. To maintain profit margins, Apple continues to sell iPad products at relatively high prices. Meanwhile, Amazon, Google, and other tablet manufacturers sell tablets at low prices because their profits come from app and content sales, not device sales.
Apple has stated that its goal is to sell the "best" products, not the "most" products, so this pricing strategy aligns with its mission.
However, when Apple tries to maintain the market dominance of iOS, it encounters difficulties. In the mobile operating system market, having market share is key. While maintaining high prices and high profit margins, Apple lost out on product sales that could have helped it capture more market share. Although Apple earns higher profits, it may be reducing the long-term value of iOS.
If Apple had aimed to make iOS dominate the global mobile system market, it might have already reduced the prices of the iPad and iPhone. In the short term, this move could affect profits, but it would solidify Apple's future market position. If Apple sacrifices market share to maximize current profits, its market position may be weakened.
For Apple, the right approach can only be to reduce the prices of the iPad and iPhone and reinvest more profits.
Apple's mobile device business has extremely high profit margins. Even with significant price reductions for the iPad and iPhone, Apple would still be profitable. This way, Apple could increase the growth rate of device sales and expand its global market share.
You can't have both fish and bear paws. Apple cannot both maintain the market dominance of its mobile system and keep high profit margins. As competitors become stronger and systems like Android become more widespread, iOS will gradually become a niche system. Ultimately, if iOS becomes such a system, it will lose value for developers and publishers, leading to unimaginable consequences.
Therefore, Apple investors and supporters should not ignore the iPad sales issue from last quarter. They should expect Apple to release a tablet with highly competitive pricing.
