Apple Partners: iPad Prices Not Likely To Drop Soon
While the high mark-up fueled speculation that Apple has left room to lower iPad prices if the company so desires, Apple partners said they don't see iPad prices dropping in the near future.
Nick Gold, sales manager at Baltimore-based Chesapeake Systems, said he doesn't expect the iPad's price to come down at all anytime soon.
"All this talk of discounting, prior to the product's release, is beyond my comprehension," he said. "One of the big reasons regarding the iPad was that it's being sold at an initial price point way below what most people were expecting. Apple seems to have no reason to think about discounting ... I think that the iPad at $500 will be a smash success."
Michael Oh, president of Boston-based Apple reseller Tech Superpowers, agreed on the iPad's reasonable price point and confirmed that Apple is known for standing firm on price, despite pressure.
"As with the iPhone, I would expect other manufacturers to emulate the iPad, especially with Android and Linux derivatives," he said. "Eventually, that will result in Apple reducing the price -- but definitely don't expect that for 10-12 months -- at least."
The iPad's unique category, which falls somewhere between a notebook and a smartphone, could give it enough traction to stick to its price point, even in the long haul. While it's too early to gauge consumers' reaction to the product, analysts have high hopes and forecast sales to hit 10 million units by next year, according to The Wall Street Journal.
However, Gold said sales could be sluggish, as people don't really grasp the iPad's functionality yet.
"Once third-party applications (are) released that truly bring to light its capabilities, people (will) understand this is an entirely new platform that is priced very competitively as-is," he said.
According to Oh, two features will work wonders on Apple's side: its in-store distribution network and its unlocked GSM version of the iPad.
"I expect the (GSM) to sell like hotcakes in international markets if the foreign prices are close to the U.S.," he said.
For the basic 16GB unit, iSuppli calculated the total cost of the tablet's components as $229.35, without the wireless feature. This model is the least profitable, selling for $499, compared with the 3G-decked 32GB iPad, which iSuppli says is the most profitable, costing 39 percent of the retail price at $729.
The total manufacturing and materials cost for the 16GB model equipped with 3G is $257.65, selling for $629.
At the next step, the costs for the 32GB unit with 3G and without 3G are $258.85 and $287.15, respectively, with sales prices of $599 and $729, respectively.
Lastly, Apple's total cost for the 64GB without 3G is $317.85, and $346.15 with 3G, priced at $699 and $829, respectively.