Perhaps this is a new Apple, one that’s kinder and gentler to your wallet.
The Cupertino, California, consumer electronics on giant on Tuesday unveiled a new iPad. While the $329 price tag (£319, AU$469) is identical to last year’s model, the new version comes packed with more features — notably support for the Apple Pencil stylus. As CNET editor Scott Stein says in our live blog, it’s a lot like the 9.7-inch iPad Pro, but with a really good price.
This “bargain” iPad Pro could just be the start. RBC Capital Markets analyst Amit Daryanani said in a research note on Sunday that he expects the next iPhone X and so-called iPhone X Plus to start at $899 and $999 in the US, a hundred-dollar haircut from the original iPhone X’s starting price.
There are also the persistent rumors of a new, more affordable MacBook Air. The current version, badly in need of an update, starts at $999. Lastly, its $159 AirPods already look like a bargain when you stack them next to pricier offerings by Bose, Jaybird or Jabra.
These potential price cuts run counter to the perception that Apple’s reputation and loyal following always command a higher price tag. The case of last year’s iPhone X debut suggests that even Apple can go too far when it comes to charging a premium. More affordable products could reinvigorate consumer interest in Apple’s products, while helping the company maintain its leadership position.
“Apple drains all of the profit, then lowers prices to make sure they can maintain a good share of the remaining addressable market,” said Maribel Lopez, an analyst at Lopez Research.
An Apple spokeswoman couldn’t reached for comment.
All about the kids
Apple made no secret that it designed its new iPad specifically for students in the classroom. After all, the company hosted the event at Chicago’s Lane Tech College Prep High School and spent the vast majority of the presentation talking about new classroom tools. Those include Apple School Manager, which lets teachers create Apple IDs by bulk, and the Classroom App, which helps teachers manage students and keep them focused on tasks.
Apple CEO Tim Cook has long talked up the opportunity to outfit students and workers with iPads, and the company has boasted of big deals, like one it struck with the Los Angeles Unified School District. But that deal fizzled out with technical and security problems, and now it’s Google’s Chromebooks that have capitalized on this opportunity.
Google’s Chromebook has taken over the US education market, with nearly three out of every five machines used in schools running the Chrome operating system in 2017, according to researcher Futuresource Consulting. More than 25 million students across the globe are using Chromebooks.
Apple’s struggles in schools — as well as with its iPad — mark a sharp contrast with its success in smartphones through its iPhone franchise. They underscore the fickleness of the tablet business. Still, Apple has no intention of giving up, since getting children hooked on its products early helps ensure future generations of loyal customers.
“Apple’s in a war for the education market because it sets the tone for future buyers,” Lopez said. “Lose the education market and lose the future of your business.”
Still, Apple chose not to compete on price with the iPad, a move that was widely expected. Instead, it opted to pack in more features and classroom programs to stay competitive.
iPhone correction
Apple may go a different way with its marquee smartphone franchise. The current generation of the iPhone X has enjoyed “limited success” thanks to its high price tag, according to Daryanani. He isn’t the only one to express that sentiment. When the company posted its fiscal first-quarter results last month, iPhone sales missed Wall Street expectations.
“The most interesting dynamic to watch will be pricing, specially considering the limited success iPhone X had with the $1,000 average selling price,” Daryanani wrote in his note.
The debut of the iPhone X came at a time when few competitors attempted to push the envelope on price. The Google Pixel 2 started at $650, while the larger Pixel 2 XL began at $850. Even the high-end Samsung Galaxy Note 8 cost $929.
Samsung’s Galaxy S9, which debuted late last month, starts at $720, with the Galaxy S9 Plus at $840.
That doesn’t even take into consideration the legion of Android vendors like OnePlus, Motorola or LG, which have attempted to introduce flagship phones at a much lower price.
Relative to an iPhone X, they look like bargains. The company, however, does offer the lower-priced iPhone 8 ($699) and iPhone 8 Plus ($799), as well as its entry-level $350 iPhone SE. And thanks to its strategy of leaving older iPhone models in the lineup, the company has more “bargain” phones than ever.
Cook said in February the iPhone X was the top-selling model in every week since its November launch.
Premium ain’t going away
That isn’t to say Apple is heading for the bargain bin.
Apple lowering the price of its iPhone X by $100 would still make the phone more expensive than everything but the Galaxy Note 8, which is a jumbo phone more on par with the rumored iPhone X Plus.
And Apple’s insistence on keeping that $329 price tag on the new iPad still makes it more than double the $150 Fire HD tablet (Amazon’s priciest option) or a Chromebook, which rocks a full keyboard and can be purchased for less than $200.
The HomePod smart speaker and Apple TV box are also priced well above their respective competitors.
In the end, it may matter less how expensive these products are, as long as consumers are still in the Apple universe of services — Apple Music, iCloud storage, the App Store and more. Some analysts see it becoming the primary growth driver down the line.
“It’s an acknowledgement that hardware isn’t the end-all be-all of it,” said IDC analyst Lauren Guenveur.
So even if your wallet gets a break on new Apple gear, it could still take a hit from all the movies and games running on it.
