Case – iPad Pricing
Case – iPad Pricing
Supplementary material
1. Blog: “Tablet makers rethinking things in wake of iPad’s $499 price”, Ars technica Street
Heat, 1/29/2010
2. Article: “Why Amazon Cannot Afford To Lose The eBook Wars To Apple”, Washington
Post 2/4/2010.
3. Article: “Why Publishers Short-Sighted in E-Book Price Fight”, PC World 2/7/2010.
4. Excel Spreadsheet “iPad Pricing Analysis”
Introduction
¾ “We like to call it…The iPad.”
¾ On January 27th, 2010, Apple’s CEO Steve Jobs announced in an extensively publicized
televised address the new product in Apple’s line of mobile devices: “The iPad”
¾ The iPad is a slate capable of connecting to WiFi and Cell Phone Networks (via 3G data
protocols) with a slick, user-friendly design.
The iPad joins the series of developments by Apple in the last decade in mobile
computing and entertainment: portable music player (iPod), portable media consoles
(iPod Touch), portable computing/laptop () and portable communication
device/smartphone (iPhone)
¾ One important difference of the iPad model with respect to previous product launches is
the large number of options/models that Apple has decided to offer initially for the iPad:
3 different storage configurations (16 GB, 32 GB, 64 GB) and two connectivity
configurations (IEE 802.11n WiFi or WiFi/3G connectivity). This is unusual since
traditionally the previous launches have included a limited number of options (the
iPhone went on sale on 6/29/2007 with just two options: 4 GB selling for $499 –non-
subsidized by the carrier- and 8 GB selling for $599 –non-subsidized by the carrier-).
¾ Your goal in this case is to study the considerations and trade-offs behind the choice of
product breadth (number of configurations available) and pricing. You will need to put
yourself in the shoes of Apple’s Product Development to derive an optimal product mix
giving the expected demand for the product and its costs of production.
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