Goldman Sachs slapped over iPad price-cut call
Investment banker talking 'absolute nonsense'
Apple is unlikely to slash the price of its fondleslab this Christmas as margins are too low, despite a warning from Goldman Sachs that the premium is out of kilter with hard-pressed consumers and sales could suffer this Xmas.
Investment analyst Bill Shope has warned clients to think the unthinkable and closely monitor unit sales this quarter in anticipation of falling demand for the original, comparatively over-priced iPad.
Holiday demand could underpin sales growth but "we believe it is prudent to assume the iPad is facing some near term challenges," said Shope.
He argues that three remedies could help to stave off competition from Android-based rivals – the growing adoption of the iCloud, sticking Siri on the fondleslab and lowering average sales prices.
"A sub-$400 iPad 2 with 8Gb of capacity could further limit the competitive prospects of Android tablet vendors in 2012 and attract more cost-sensitive consumers amid the currently depressed macroeconomic environment."
But the claim by the investment bank is "absolute nonsense" said Salman Chaudhry, product manager for mobile computing at Context, which tracks sales-out data through the channel.
"Apple won't cut the price, definitely not, the margins are too low," he told The Reg. "On a low-end model we estimate that Apple makes $60 to $70 profit. On an iPhone it is nearer to 60 to 70 per cent margins."
In Q3, Apple sold 438,000 units through distribution across Western Europe, a 63 per cent market share, but the firm's total market share is likely higher as it ships products direct to resellers and its own branded stores rather than using a two-tier model.
Figures for October show that Apple has already shipped 190,000 units in the region and Chaudhry said this was an indication that the iPad remained high on shoppers' Christmas lists. ®
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