Will Apple and its carrier partners ever agree to subsidize the iPad? At least one analyst and Apple investor thinks that both the manufacturer and carriers can benefit over the long term by allowing customers to purchase an iPad with a subsidy, much like they would with an iPhone or any other smartphone. “As much research has shown, it’s cheaper and more profitable for the firm to retain customers and “milk” them throughout their lifetimes,” A.I. Houriani from Seeking Alpha said. “This approach has really gained traction in just the past two decades, as competition has become fierce.”
Houriani believes that, much like when a customer goes to buy a phone, he or she will overlook a cheaper sticker price, even if they end up paying more over the long term. The iPhone, for example, might cost you $100 per month but only costs $200 at the store counter. The iPad costs at least $300 more but appears more expensive from the get-go. By offering the iPad at a cheaper $200 price point, Apple and carriers can milk more money out of customers throughout the length of a 2-year contract.
It’s a compelling idea, although we suspect Apple will continue dropping the price of older iPad models in order to suck customers in. I’d argue that customers don’t want to sign up for another monthly bill or fee and that they’d much rather prefer to pay $399 for the iPad 2 and call it a day. I’m not so sure a consumer would spend, say, $199, and then an additional $40 per month for 4G LTE data for the iPad 2. Maybe $100 is the sweet spot, though? What do you think?
[via Seeking Alpha]