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The hype prior to the iPad release on 3 April was extraordinary, and extraordinarily successful.

But now the hype is being replaced by reality, do we all really truly need to rush out and spend $500-$830 on an over-priced under-featured device that, for most of us, fulfills no clear need to start with.

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Apple iPad - A Device Ahead of its Time?

Why You Should Wait Before Buying any Tablet Device

This 'modern' tablet actually dates back to 2002, and was based on Windows XP Tablet PC software.

Chances are you've never seen the device or heard of the OS.

Moral of the story - tablets are neither new nor guaranteed successes.

Part 1 of a 2 part article on why you should wait to buy an iPad.  Part 2 here.



Apple describes the iPad as 'their most advanced technology in a magical and revolutionary device'.  Now look up at the eight year old image above.  Other than the Apple hype, what is truly magical or revolutionary?

Maybe - indeed, quite possibly, Apple's hype is all it takes to guarantee the success of the iPad.  But, even so, don't rush to buy one of the first models.  You'll be getting a dead end, under featured and over priced unit that will almost surely drop in price and improve in features in the reasonably near future.

Plus, a plethora of soon to appear competing devices means the truth is changing daily in this product category, and the longer you wait to buy a unit, the better the choices you'll have open to you.

Do You Have a Reason to Buy an iPad Yet?

Some of us are compulsive 'must have' early adopters of all new gadgets that come out, whether we have a need for them or not.  It seems very likely that many of the iPad sales over its launch weekend went to such people - in particular the huge number of iPads pre-sold to people who ordered them online before they'd ever had a chance to see or touch or use an iPad anywhere were clearly buying them on trust or in the hope that they could use them for something.

Will buyer's remorse set in?  Will iPads slowly make their way to a remote and dark/dusty part of our houses, become used less and less, and appear for sale on Craigslist and eBay at heavily discounted prices?

Or will the now large market of initial iPad users provide the test bed for developers to experiment with new types of applications and uses for the iPad, and will some new 'must have' applications for the iPad appear, transforming it from its present rather precarious role as 'sexy gadget' to a sounder based value proposition for 'normal' people to buy?

Why not wait for the answers to these questions before buying a unit yourself?

Of course, if you do have a clear need for an iPad today, sufficient to justify its purchase today, then of course you should buy one today.

But if you're not yet sure about what you'd use it for, and how it would fit in with the other computing devices you already have (laptops, netbooks, phones, eBook readers, etc), you might be well advised to sit back and let other people puzzle out the answer to that question for you.

Read on to see how

  • We believe the iPad and its software is currently too expensive (and likely to drop in price)

  • The current iPad has some important weaknesses which the next model series will almost surely fix

  • iPad competitors are about to appear everywhere, probably with better price/performance and value propositions

  • The success and ongoing market dominance of the iPad is far from certain

For all these reasons, unless you have a definite need that you are certain the iPad will solve today, we recommend you wait a while before buying one.

Is the iPad Too Expensive

If you buy an iPad today, you'll be asked to pay $499, $599 or $699 for a Wi-Fi model with 16GB, 32GB or 64GB of memory.  If you choose to add the 3G data and GPS option, you'll pay an extra $130, making the price per unit $629, $729 or $829.

Is this 'too expensive'?  Well, it depends on what value you would get from the iPad, and what the cost of alternative approaches to solving your need for an iPad type device might be.

Another way of answering this question - and a hint about future price moves - might also be evaluated based on the underlying product cost of making the device incurred by Apple.

Selling price compared to cost price

The easiest part of this equation to answer is the underlying product cost.  It seems that Apple's actual cost to build an iPad is less than half its selling price.

So, break even prices on the units could be as low as $250 for an entry level 16GB unit up to $400 for the 3G/GPS equipped top of the line 64GB unit.  Clearly Apple is getting a great return on each unit it sells, and - if it chooses to - could drop the selling price.

Taking a very extreme view, Apple could even sell below cost and still profit in the longer term, because each iPad opens up a new ongoing revenue stream to Apple in the form of software, video, music and book sales through its iTunes stores.

iPad compared to Netbook pricing

About the closest analogy to an iPad might possibly be a Netbook at present.  Which is the 'better' unit, and which offers you a better solution to whatever need you may have for some sort of extra computing device?  And what are the cost differentials?

Certainly, no Netbook can stand close to an iPad in terms of 'sexy slick design', or small size and light weight.  Ipads even have longer battery life than most Netbooks.

But whereas an iPad has a 9.7" 1024x768 pixel screen, Netbooks often have a larger and higher resolution screen.  And whereas iPads have up to 128GB of memory that can never be upgraded, Netbooks might have a 250GB hard drive as standard, with the possibility of being upgraded to even a 1TB hard drive if that is what you might want.

An iPad is a 'closed' design computer - both literally (you can't get inside it, even to replace the battery), physically (you can't directly access its storage and load/unload your choices of data files), and virtually (the only software it runs is that sold through Apple's iTunes store, and Apple mercilessly restricts what can be sold, in particular refusing any software to be made available that competes with Apple's own core software products).  Most Netbooks are open by all three of these measures.

You can't even connect any USB devices or SD cards to an iPad, other than through a special and very restricted Apple interface (and an extra $29 for the hardware to do so).  The USB/SD connectivity is limited to only transferring still images (not video) from a camera to the iPad.

A Netbook of course suffers from none of these limitations.  It might also have video inputs and outputs, digital inputs and outputs, a built in webcam, and of course a 'real' keyboard.  Maybe it also accepts Ethernet internet connections, and who knows what other goodies.

As for pricing, Netbook prices start around $300 and go up from there.  If you choose to get one with some sort of wireless data service, the downside is you might need to sign a contract with a wireless provider, but the upside is this might in turn get you a subsidized purchase price.

There's very little if any functional advantage of an iPad over a Netbook - possibly even the reserve; and in terms of cost, an iPad costs 50% to 100% more than a vaguely similar Netbook.  When you take out the hype and dispassionately consider these issues, it is hard to justify an iPad for most usual purposes.

Will iPad Prices Drop?

Ipad pricing will surely drop; the only thing we're not sure about is how soon and by how much.

It might be instructive to see what happened with the iPhone pricing.  In 2007 when Apple first started selling its iPhone the price was set at a ridiculously high $599.  Two months later, the price dropped to $399.  the price of the original iPhone dropped again to $199 a year after its launch.

Nowadays, not quite three years after the initial phone was released, its successor phone (the iPhone 3G) is available for a mere $99, and the latest/greatest and vastly superior iPhone 3GS is priced starting from $199.

Clearly, early adopters paid a huge price premium, and for an inferior product, in the case of the iPhone.

It is possible Apple is adopting a similar pricing model here.  It is also possible that if the iPad sells very well, Apple will get further reductions in the cost of making the iPad due to economies of scale kicking in, making it financially acceptable for Apple to drop the price and still earn a generous profit on every unit sold.

Additional pricing pressure will come from competing tablet devices.  Today the iPad is the first of the newest generation of tablet devices, and so has the market almost to itself.  But this situation will be short lived.  Other major manufacturers are very close to releasing their own competing tablet devices (eg HP with what they are referring to as a Slate, based on Windows 7 and thought to possibly be released in June), as well as many smaller manufacturers with less market presence and clout.

The company that largely created the Netbook concept - Asus - is also expected to release two tablet devices in June - one based on either Google's Android or Chrome OS, and the other using MS Windows 7.

Some commentators are predicting over 50 different tablet type devices will be on sale in time for this year's Christmas season.

In particular, we expect to see tablet devices powered not only by other 'full sized' operating systems, ie Windows 7 and Unix, but also by mini-OSes, analogous to the way that the iPad OS is 99% identical to the iPhone/iPod Touch OS - the two main competitors here being Windows Phone 7 and Android.

While Apple has always been comfortable setting its prices at the high end of the market, there is a difference between a $50 - $100 premium for an Apple iPod compared to some other MP3 player (with all features and related issues being either the same or tilted in Apple's favor), and a $250+ premium for an iPad compared to some other type of tablet that might well have better hardware specs as well as a lower price.

In addition to these factors above, it seems inevitable and certain that as Apple releases new versions of the iPad (either on an annual basis or perhaps more frequently for its first update) that newer iPads will have better features and the same or lower pricing.

So, yes, iPad pricing will definitely come down, due to all the reasons mentioned above.

When Will iPad Prices Drop?

UPDATE Oct 2010 :  We have been surprised by two things.  First, the extraordinary success of the iPad - for almost all the time until now, there has been a backlog of orders for iPads, and Apple has been selling them faster than they can make them.  Second, the slowness of other companies to get iPad competitors to market.

And so Apple would be crazy to drop the price of a product that it can sell more of than it can manufacture, and it has held the pricing steady at the currently inflated levels.

So we're now focusing on next year - 2011 - as a time when we might see iPad pricing drop, perhaps when the new model iPads come out, complete with extra features (ie cameras), and by that time, more of the 23+ other companies that have announced plans to release iPad/tablet style devices will actually have their products in the marketplace.

If you can't wait for iPad and tablet pricing in general to drop, you need to first read our multi-part series 'A Buying Guide to iPad and Tablet Devices' that walks you through all the things you need to know about how to compare and choose the best of the growing profusion of such devices for yourself.

For more reasons why you should wait to buy an iPad, please click on to the second part of this article.

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Originally published 9 Apr 2010, last update 21 Jul 2020

You may freely reproduce or distribute this article for noncommercial purposes as long as you give credit to me as original writer.


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