iPad: it's all about the $500 price tag- and all the Apps

iPad: it's all about the $500 price tag

* By Catholic Online
* 2/21/2011
* Catholic Online (www.catholic.org)

Competitors trying to come up with something comparable can't meet that sum

The iPad is still the first and best-selling product of its kind. It's mostly because of its very reasonable $500 price tag. Apple's competitors are having a hard time meeting that amount. Apple has traditionally aimed at the high end of the mobile computer market with MacBooks marked $1,000 and up. In addition, Apple execs repeatedly told investors they couldn't produce a $500 computer that wasn't a piece of junk - and the iPad is certainly not a piece of junk.
Competitors are struggling to match the $500 price point because they aren't as fully integrated as Apple, which in terms of retail strategy, a digital content market, hardware and software engineering is everything.

Competitors are struggling to match the $500 price point because they aren't as fully integrated as Apple, which in terms of retail strategy, a digital content market, hardware and software engineering is everything.

LOS ANGELES, CA (Catholic Online) - In contrast, Motorola's Xoom tablet is debuting in the U.S. with an $800 price tag. Samsung's Galaxy Tab, with a relatively puny 7-inch screen, costs $600, without a contract.

The question on many people's minds was how Apple was able to get their latest high-tech gadget at the $500 price tag.

Apple now has 300 retail stores worldwide selling iPads directly to customers. According to Jason Hiner of Tech Republic, that's advantageous, because if the iPad were primarily sold at third-party retail stores, a big chunk of profit would go to those retailers.

Apple has also partnered with a few retail chains such as Best Buy and Walmart, but those stores always seem to get a small number of units in stock. Hiner says that the true purpose of these partnerships is probably to help spread the marketing message, not so much to sell iPads.

"The company can swallow the bitter pill of hardly making any money from iPad sales through its retail partners because it can feast off the fat profits it makes when customers buy directly through its retail outlets and the web store," Hiner says.

"However, companies like Motorola, HP, and Samsung have to make all of their profit by selling their tablets wholesale to retailer partners."

Hiner fails to mention the high overhead costs that Apple must pay handsomely for each of its 300 stores. Apple running its own stores does present clear benefits. The customer outreach is enormous, and in Apple stores, Apple products don't have to compete with gadgets sold by rivals on other shelves.

Apple is the most vertically integrated company in the world. In addition to operating its own retail chains, all Apple hardware and software are designed in-house, and Apple also runs its own digital content store, iTunes.

Competitors are struggling to match the $500 price point because they aren't as fully integrated as Apple, which in terms of retail strategy, a digital content market, hardware and software engineering is everything.

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