Aggressive iPad Discounts Signal Apple's Move for Market Share
Apple's discounts of the iPad Air and first-generation iPad Mini were "very aggressive," a retail analyst said today, and were aimed at scooping up as much U.S. tablet market share as possible.
Mon, December 02, 2013
"Apple has been very aggressive this holiday season by driving down prices, whether that was letting retailers change prices or offer gift cards, or through its own gift card discounting," Stephen Baker of the NPD Group said in an interview Monday.
"They want market share," Baker added. "It was too widespread not to be authorized by Apple itself."
Baker was referring to the sales Apple and several of its key retail partners -- Best Buy, Target and Walmart -- ran last week, starting on Thursday, the Thanksgiving holiday in the U.S., and continuing on Black Friday.
For its one-day Nov. 29 sale, Apple bundled a $75 Apple Store gift card with the purchase of an iPad Air, competing with -- but not matching -- deals at other retailers. Target both reduced the price of the 16GB iPad Air to $479 and offered a $100 card, while Best Buy discounted the Air to $449.
The price cuts from list -- the 16GB iPad Air's is $499 -- and the large-denomination gift cards were unusual for an Apple product, Baker noted. "There were plenty of places where the Air was not advertised at $499," he said, referring to the discounted prices.
And for all intents and purposes, the gift cards were discounts. Cynics may scoff at gift cards and refuse to put them on equal footing with direct price cuts, but that's not the way customers see it.
"The whole discussion is silly," said Baker of the arguments about whether gift cards are second-class discounts. "Gift cards are money, consumers recognize them as money, and they want to spend it."
Baker declined to provide estimates of Apple's tablet sales over the weekend, saying that NPD was still collecting data from its sources. But tablets, as well as large-screen TVs -- those 50-in. or larger -- were the biggest sellers in the electronics category.
Another analyst believed Apple made a mistake in pushing the iPad by throwing in an Apple Store card, which are valid only for purchases at the company's online or retail stores, but are not good for app or digital content buys.
"There is so much more long-term benefit to be gained from iTunes/App Store gift cards," argued Ben Thompson, an independent analyst whose commentary appears on his Stratechery website.