Steve Jobs bends iPad price reality
Ordure on order
When he unveiled the iPad 2 last Wednesday, Steve Jobs hammered home the point that it was a bargain buy when compared to the competition. He was, at best, stretching the truth. At worst, he was shoveling bullshit.
"Some folks are out there saying, well, they're only a little bit more expensive than us at $799," Jobs told his San Francisco audience in a clear reference to the Motorola Xoom, which shipped late last month.
Standing in front of a slide that displayed the iPad 2's prices, Jobs continued: "When you take a look at this matrix of six models, five of these six models are less expensive than $799. So they've really moved up into high ground. We only have one model that's more expensive than $799."
We resisted the temptation to Photoshop Steve Jobs with a growing nose, à la Pinocchio
Brett Arends of MarketWatch, in a price-comparison article this Tuesday, begs to differ. And he makes some rather incontrovertible points:
- For $799, Motorola provides a Xoom with both Wi-Fi and 3G, and includes 32GB of storage space. A comparably equipped iPad goes for $729.
- If you sign up with Verizon for that Xoom with a two-year contract, you'll pay $599. For a comparably equipped iPad from Verizon, you'll pay the full $729. From AT&T, it's currently $629, and that's for the now-discounted original model.
- Should you want more storage space in your iPad than 32GB, you'd have to move up to the $829 64GB model – a $100 premium. Should you want to upgrade your Xoom's storage space, on the other hand, you could simply slip a 32GB card into its microSD slot – and that 32GB would set you back about $65.
"None of this, naturally, is to suggest the Xoom is inherently the better product or that you should buy one instead," writes Arends. "But it does counter the suggestion that the iPad is always the much cheaper alternative. It isn't. Despite what Jobs would have you believe, the picture is more mixed."
In his concise monograph On Bullshit, philosophy professor Harry Frankfurt of Princeton University writes: "However studiously and conscientiously the bullshitter proceeds, it remains true that he is ... trying to get away with something."
We'll leave it to you, Reg reader, to divine Jobs' intent, but when comparing pricing, we advise that it's always best to compare, shall we say, apples to apples. ®
Seems like Brett Arends is the one distorting reality
To quote Brett: Not so fast.
32Gb Xoom: $799
32Gb iPad: $729
64Gb Xoom: $864
64Gb iPad: $829
So far, so good - Brett admits the iPad 2 is cheaper.
But then he starts on about how you get a $200 discount on the Xoom if you sign a 2-year contract. This may well be true, but he fails to point out that means YOU'VE SIGNED A 2-YEAR CONTRACT!!!
There's no contract with the iPad. At least, not when bought from Apple. I'm sure some carriers will offer you a subsidy to lock you in, but Brett hasn't mentioned that, so we can only go on the figures he's working from. And I note Brett doesn't list the total cost of said 2-year contract - I'm guessing it's more than $200, though...
So, after all that, all Brett has done is point out that yes, El Jobso was perfectly correct, and the iPad 2 is indeed cheaper than the Xoom across the board (since there is no 16Gb Xoom).
Perhaps Brett should spend more time comparing the prices of pocket calculators before posting another article like this one?
That is the most long-winded troll ever. More concise next time..
It's a shock that a subsidized device with a 2-year contract costs less than one that doesn't require a contract? Hard to claim balanced reporting when you slip that one in, El Reg.
Anyway, Jobs' point is actually 2-fold:
1) Specs are not king
2) The other guys don't offer anything at the lower price point that Apple hits by lowering specs
(Fascinating, by the way, to see Apple competing on price.)
Apples to Apples
"For $799, Motorola provides a Xoom with both Wi-Fi and 3G, and includes 32GB of storage space. A comparably equipped iPad goes for $729."
The problem is, though, that, certainly for the original iPad, the biggest seller was the $499 16GB wifi model, and this should be expected to become even more the case, due to increasingly common wifi tethering on phones, and the media streaming stuff built into iOS 4.3 (streaming media was always available, of course, but previously via third-party apps that the average consumer mightn't be aware of). Motorola doesn't have anything at that price point.
"If you sign up with Verizon for that Xoom with a two-year contract, you'll pay $599. For a comparably equipped iPad from Verizon, you'll pay the full $729. From AT&T, it's currently $629, and that's for the now-discounted original model"
That's without a contract, though, no? Orange in the UK will sell you a 32GB 3G iPad for 149 pounds, but you'll be tied into a 2 year contract at 27 pounds a month. I don't think that the US carriers currently offer the iPad on contract, but it's unreasonable to compare a month-to-month or pre-paid plan with unsubsidized device to a two year contract with subsidised device.
"Should you want more storage space in your iPad than 32GB, you'd have to move up to the $829 64GB model – a $100 premium. Should you want to upgrade your Xoom's storage space, on the other hand, you could simply slip a 32GB card into its microSD slot – and that 32GB would set you back about $65"
Not currently, you can't. At this time, the microSD slot in the Xoom cannot be used; this will be amended with a software update at an unspecified point in the future. By the way, the obvious reason one might want lots of storage on a tablet is for playback of high-def media; the $65 microSD you're talking about is almost certainly a Class 2, which means that it has 2MB/sec write speed and an unspecified but generally low read speed, and which might struggle with HD media. For a class 8 or 10 32GB microSD, you're looking at more like $100, rising to $150 or $200 for a big brandname like SanDisk.
"We'll leave it to you, Reg reader, to divine Jobs' intent, but when comparing pricing, we advise that it's always best to compare, shall we say, apples to apples."
Indeed. So perhaps best not compare subsidised price to unsubsidised price, then.
Re: your last line shows you've noticed.
You are totally failing to understand the difference between competing on price and having a competitive price. Apple aren't and never will compete on price (not while jobs is in charge at least). They have the highest margins in the business. Worryingly for their competitors that is the case even though for the iPad they also have a competitive price. If you had any understanding of business you would appreciate just how significant that is and that it means the competition are totally blown away. Apple are pretty much controlling the crucial lines of the tablet component supply chain. Their competitors have higher prices and lower margins, the worst place to be.