The Wall Street Journal posted today a report by a note from Credit Suisse analyst Bill Shope, which was based on a meeting with Apple executives and discussing of lower price cuts if the iPad demand does not meet selling expectations.
Apple wants the iPad to be the best device for a few key use cases. For instance, the company believes it could eventually be seen as superior to both handheld and notebook devices for browsing the Internet, using the App Store, and consuming mobile media (video, photos, and e-books). Nevertheless, in other areas, notebooks, the iPhone, or an iPod may be more appropriate. This clear segmentation of capabilities suggests that cannibalization may be less of a concern than most currently believe.
Shope also wrote that despite the seemingly aggressive pricing of the iPad — the lower-than-expected price points range from $499 to $829 — Apple seemed to indicate it would respond with price cuts if demand for the device wasn’t revving up the way it liked. “While it remains to be seen how much traction the iPad gets initially, management noted that it will remain nimble (pricing could change if the company is not attracting as many customers as anticipated),” Shope wrote.
I was shocked at first when I heard Steve Jobs announce the starting price of the iPad. At $499 USD for an entry level 16GB WIFI model, I’m confident that many consumers will be satisfied.
