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iPad Air with cracked Screen

The shape-shifting iPad
November 16, 2013

This week saw Apple release two iPads - the iPad Mini 2 and the iPad Air – that represented notable departures from their predecessors. Apple is cleverly covering the field to prevent any more loss in market share...

No longer can Apple simply just churn out slightly improved almost identical iPads and call them new releases (the benefits of market power); as we’ll see, this time they’re actually following their competitors in a desperate attempt to regain lost ground. 

 The iPad has been ceding market share to cheaper, smaller and lighter tablets like the Kindle since 2011. In that year, Apple garnered 83% of the U.S. tablet pie. That share plummeted to just 59 percent in 2012 and is expected to fall even further by the end of 2013, down to just over 54 percent. After that, a drop below majority is likely.  

Apple's share price has also been falling

No doubt Apple had this front of mind with its latest releases. The iPad Air (which is Apple’s follow up to the current full-sized iPad) is faster and comes in various colours. It has 1080p HD video, a new FaceTime HD camera with larger pixels, improved backside illlumination and dual microphones for better audio when you're using Skype. But most notably it’s much thinner and lighter – this change of form is an indication that Apple is upping the fight.

The new iPad Mini sports a much-anticipated retina screen as well as a faster M7 motion coprocessor A7 chip (replacing the Dual-core A5 chip). It’s a tiny bit heavier, but not so much you’d easily notice. These additions, particulary the retina screen, are a big deal and essentially mean that Apple now provides the quality of the large iPad in a reduced size.

Indeed, both the iPad Air and its new iPad Mini (notably bringing a retina screen) represent a shift to a more compact form, seeking to address the smaller and lighter aspects of the competition. As to how successful this will be, we will have to wait and see. 

xi.Even though Apple has made a bigger effort in this round of iPad upgrades, it’s not exactly a game changer.  In the words of analyst Carmi Levy, “For anybody who still wants an iPad, obviously it'll be a good enough upgrade. But for the rest of the market that's being flooded with really compelling, cheaper alternatives running Android, it isn't going to be enough to stop the market share slide that Apple's been experiencing.”

The main reason for this is the one thing that Apple still doesn’t seem to want to address - the pricing. With the Air costing $649 (for the 16GB WiFi base model) and the equivalent new Mini costing $549, there has been no reduction at all.

It is this refusal to ditch its premium pricing strategy that is really hurting Apple, according to online magazine Business Insider. “This ‘premium pricing’ strategy is a departure from the strategy Apple has used for the iPhone and early iPads. (Those products were priced at or below the rest of the market). This is also a strategy that helped bury Apple in the earlier PC era — when it was charging premium prices for the Mac.”

The simple solution is for Apple is to reinvest its profits into reducing the price of its iPhones and iPads. “Apple is so phenomenally profitable that it could reduce its iPad and iPhone prices significantly and still coin money,” the website explains. “And, in doing so, it could also accelerate its unit growth and increase its global market share.”

But if they’re not going to drop price, what could Apple do? An entirely new product category would potentially spark off an Apple renaissance. But the question is, without Steve Jobs, is Apple running out of steam? The smartest move now seems to be for Apple to humble itself and drop prices.

 

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