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Best Buy (BBY) slashes its price for the HTC Flyer tablet from $499 to $299. H-P's decision to...

Best Buy (BBY) slashes its price for the HTC Flyer tablet from $499 to $299. H-P's decision to unload TouchPads for $99 "permanently changed consumer acceptance of prices that were always idiotic for tablet(s)," writes Karl Denninger. "Firms enjoying high margins on them now (cough-AAPL-cough) are going to get trashed."
Comments (46)
  • Once Apple drops the iPad to below $300, they are all DEAD MEAT.


    If you think you can win the price war against a company with $76 billion in cash, the leanest supply chain, the best consumer reputation, and the most complete ecosystem, you are out of your mind.
    2 Oct 2011, 09:41 AM Reply Like
  • Very weel said.
    2 Oct 2011, 12:44 PM Reply Like
  • Apple laptops have sold at a premium to other laptops. They have not competed on price. If Tim Cook suddenly decides to compete on price with other vendors, then I think that would be a poor strategy. Part of the allure, and success, of Apple products is that they do cost a premium. They might sell a previous generation iPhone or iPad at a reduced cost to lower inventory, much like they have done with MacBook Pros in the past, but to come out with a new cheaper version is a strategy I think would eventually fail; this is something I see this author suggesting. Any high end product needs to be exclusive in order to maintain that desire. While there could be an iPad Nano or an iPhone Nano, the emphasis should remain on premium products at premium prices.


    There is no tablet market, there is an iPad market. All other companies are merely competing against netbook sales. Even when you look at it that way, price conscious consumers will compare netbooks, low end laptops, and tablets, then decide function per dollar. Amazon has it right; the real money is in content, and they have a good delivery system.
    2 Oct 2011, 02:08 PM Reply Like
  • Yes, AAPL could put AMZN out of business with price cuts. Who wants the Kindle Fire over the iPad? Nobody in the corporate world is going to show up with a glorified book reader.
    2 Oct 2011, 02:36 PM Reply Like
  • AAPL will never drop the iPad below $300 for the sole reason that such action would destroy their premium image. Apple doesn't want to be that kind of company that has 50% off sales. They know their success is due largely to their premium reputation and their pricing decisions are based off of this fact.
    2 Oct 2011, 08:33 PM Reply Like
  • Companies produce products to make money. AMZN asserts they can make money with FIRE while losing money on the hardware...we will see.


    The others ? Slashing prices from 499 to 299 means someone is writing off costs. These products will not continue to be built at a loss and investments will not continue to be made if there is no return.


    2 Oct 2011, 10:08 AM Reply Like
  • They are all hopeless strategies aimed against Apple.
    2 Oct 2011, 12:47 PM Reply Like
  • The "pad fad" is coming around the clubhouse turn and rumbling down the backstretch. Soon, very little money will remain to be made a saturated commodity-like pad hardware market, and all the money will reside in content. Those, like Amazon and Apple, that have significant content streams will propser; the others will be squashed.
    2 Oct 2011, 10:22 AM Reply Like
  • Tack comment is spot on. The law of supply would reduce margins overall.
    2 Oct 2011, 11:21 AM Reply Like
  • What this tells us, Joe, is that technology is changing so fast (like smart phones) that these gadgets sold today will be Garage Sale fodder next year.
    2 Oct 2011, 11:38 AM Reply Like
  • I totally agree.
    2 Oct 2011, 12:46 PM Reply Like
  • Tech is self-cannibalizing by definition. That's what it does. Tech speeds up price discovery, enzymatically acting upon the economic learning curve of supply and demand.


    That's why I don't invest in a lot of tech. Some, but not a lot. Tech is for, the reason we have tech, is to make irrelevant what came before it. I just don't have time to chase that tail because I'm not a dog that gets off doing that. For the same reason I don't invest in biotech, except for ETFs if I want the exposure at certain market cycles.


    Nor do I want to watch the FDA or a judge's gavel come down on certain boutique pharmas. I don't have the stomach to play Wheel Of Fortune investing.


    I play boring, needs based securities for the most part.


    Every once in awhile, I may ride a populist wave of emotion of certain 'innovators', but I don't stick around. I don't like rock stars. They're smelly and usually, at least most of them, drug addicts.
    2 Oct 2011, 09:20 PM Reply Like
  • I agree Tack.


    It makes no sense for HP to sell tablets at a loss when they do not have content to make up for the losses.


    The $99 decision was another in a series of bad decisions by a company that is likely headed for the dustbin.


    The Kindle Fire will not come anywhere near the iPad in terms of acceptance. The Fire is an upgraded Kindle that will gain some traction. The iPad can be used by people and enterprises.


    The gap between the two is massive.


    That said, Apple and Amazon will be the likely survivors until someone figures out how to leverage Google's content.
    3 Oct 2011, 02:43 AM Reply Like
  • Only Apple does the self-cannibalizing stuff. Nobody else really does this anywhere near as much.


    You should probably stick to the securities stuff that you actually understand.
    3 Oct 2011, 09:10 AM Reply Like
  • Maybe now people will begin to realize just how over priced and over hyped Apple products really are.
    2 Oct 2011, 11:19 AM Reply Like
  • Maybe there are people who live for mediocre (and call excellence "hype").
    3 Oct 2011, 06:48 AM Reply Like
  • you all sound like Ballmer when he laughed about the iPhone - that nobody would buy one. these other products are not comparable to the iPad - walk into a mall (bellevue square, wa - 5 minutes from msft headquarters) you are lucky if you can cram yourself into the Apple store - the msft store is empty
    2 Oct 2011, 11:47 AM Reply Like
  • There was some analyst [I've forgotten] that said the iPad would become the iFlop.
    3 Oct 2011, 07:59 AM Reply Like
  • Lots of them thought this. Hating on Apple is still a pastime on WS,--I thought it would pass when Apple got to be big money, but it continues. The author of this misguided article, Karl, was one of them--that seems to be the last thing he wrote. Reminds me of an Einstein quote:


    Insanity: doing the same thing over and over again and expecting different results.


    Einstein would have loved Apple. Read his quotes sometime. e.g. "Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius -- and a lot of courage -- to move in the opposite direction."
    3 Oct 2011, 08:54 AM Reply Like
  • What extraordinary lack of comprehension in the views above.


    The iPad IS THE MARKET.


    The others can only sell at $99 because they offer nothing like the quality, the software, the experience, nor the services, that Apple does on iPad.


    As Apple cannot make enough to fulfil demand it seems a massive stretch of the imagination that it is going to reduce asp's for the foreseeable future.


    Other manufacturers have to go back to the drawing board, and within 18 months to two years, see if they can come up with something truly new and brilliant that will out innovate, not iPad 2 or 3, but iPad 4 or even 5.


    Slim chance of that happening in my book...
    2 Oct 2011, 12:10 PM Reply Like
  • 100% right on the nose. I was an AAPL holdout... until I bought an iPhone. Then my wallet opened like Nixon's China.


    Call me weird, but I so prefer quality to crap: original expertise to copies.
    3 Oct 2011, 06:47 AM Reply Like
  • I'm actually interested in buying an iPad as replacement for my iTouch. But I want a 7" version, not a 10" one.
    2 Oct 2011, 01:22 PM Reply Like
  • First of all, it's not an "iTouch". Secondly, the 7" screen isn't big enough to do much more than the iPhone/iPod Touch, other than not fitting in your pocket.
    3 Oct 2011, 09:02 AM Reply Like
  • The 7" screen is large enough for my purposes, i.e. a portable media player (videos mostly).
    3 Oct 2011, 09:47 AM Reply Like
  • Why should tablets be different than any other tech product. My first HDTV cost me over $2000 and now you can buy them for $600. My last laptop cost me $800 and now I can buy one for $350 that has more features, prices drop that's predictable in technology of all kinds.


    And that Amazon tablet is not as cheap as it sounds, it's not a good game tablet without an accelerometer, it doesn't have cameras,has limited storage that you can't expand, you're locked into Amazon market that doesn't have the Nook app but you can get both the Kindle and Nook app if you have an Android tablet like the Galaxy, Acer or Asus.


    No it's not a tablet that I am interested in buying, I am looking for something more than a reader when I purchase a tablet. There is plenty of upside for Apple in the tablet market.
    2 Oct 2011, 02:43 PM Reply Like
  • The notion that Apple will "get trashed" by the competition is absurd. Apple has millions of iPad customers who will pay the price to upgrade their tablet, not switch to an inferior product.
    You are so far off base on this you are standing in left field!
    2 Oct 2011, 03:53 PM Reply Like
  • Apple products are crack cocaine, me, just a crackhead and indirectly long AAPL.
    2 Oct 2011, 08:26 PM Reply Like
  • Are people forgetting how much touchscreen Crestron remote controls cost? I paid $600 for a Philips Pronto just prior to the iPhone launch. Now we get a 10" HD touchscreen computer that weighs a few ounces but lasts 6-8hrs and can play 1080p content smoothly, 3D video games that are between the PS2 and PS3 in complexity, and performs all of the casual computing functions people do daily for $500.


    This is all without mentioning that Apple products are the BMW's to Samsung and Amazons Fords. When a plastic garbage knockoff tablet comes out for $400, I would argue that Apple could raise their price by another 10-15%. I consider their sub-$1000 price range a great deal for this kind of technology.
    (Just my 3ยข...what I believe a lot of Apple's customer base thinks)
    2 Oct 2011, 09:13 PM Reply Like
  • Non consumer will like a $100 price hike on the iPad, that I'm certain about. It's fine to be enthusiastic about Apple products, another to take in some healthy skepticism with sound reasoning.


    Steve Jobs once said that the iPad was very competitively priced, "if you don't believe it, ask our competitors". Truth is, everybody seems to struggle to make an iPad challenger as the same price point. The Galaxy Tab 10.1, which some see as the most direct challenger to the iPad 2, sells for the same price, despite Samsung itself being the maker to many of the components (they also supply for the iPad). On the lower end, you have the Viewsonic gTablet or Asus Transformer in the $300 - $400 range, and then hosts of less well-known manufacturers, like HTC. All those companies have to pay very little for R&D (Apple defined what a tablet is, they only need to integrate all the components, and then some, like SD card), very low OS development cost (Google takes care of Android), and they want to put on a "cheap" image. But none succeeded in any volume. That's enough to tell you just how powerful Apple's grip on the market is. And they have the cushion to drop margins without going to the negative to be competitive price-wise. The iPod's price dropped over time, but it was never the cheapest MP3 player on the market. And yet no one figured out how to kill it until Apple released the iPhone & iPod Touch. Don't underestimate the brand!


    Disclosure: long AAPL.
    2 Oct 2011, 09:36 PM Reply Like
  • I wonder if Amazon factored in the potential royalties Amazon may need to pay to Microsoft and Oracle for each Kindle Fire sold? What are the odds of those? Or risk Oracle suing for an injunction on Kindle Android? What will that do to Amazon's Kindle -Profits? Earnings? Stock price?


    Let's handicap the odds of these events vs the odds of Apple lowering the price on a product that has no competition and that they make enough of to keep up with demand.
    3 Oct 2011, 03:02 AM Reply Like
  • An article on HBR at argues that the Kindle Fire is a "disruptive innovation":


    "It's not just a low-end competitor to the iPad. There is scalable technology at its core that the present-generation iPad lacks โ€” the extensive use of the Cloud. That is why Amazon can get away with shipping a device that has only 8GB of memory. What's more, the Fire has a business model advantage too โ€” Amazon is using content to subsidize the hardware.


    This means that the Fire has the potential to disrupt the iPad.


    Here is how the tablet market will play out if Apple heeds the advice of the gurus who advise that it not worry about the Kindle Fire. For the next few years, things will look good for both Apple and Amazon. Apple will maintain its dominance in the upper tier of the tablet market as its high-performance iPad will continue to improve and be adopted for more and more applications. Apple's gross margins will get better and better as it steals market share from PCs and charges premium prices...


    At some point, the iPad's performance will overshoot what the vast majority of consumers need or want a tablet to do. Meanwhile, the Kindle Fire will improve as well โ€” coming to be able to perform ever more of the functions that an iPad can perform at a significantly lower price point. And then, Apple's customers will start switching. At that point, it will be too late for Apple to respond and the tablet market leader will no longer be Apple. It will be Amazon."


    3 Oct 2011, 04:26 AM Reply Like
  • It's really short sighted to compare devices based on server tech. Do you really think Apple can't do a cloud implementation?


    There is no way to simulate RAM with WIFI. Any WIFI implementation would be orders of magnitude slower. Kindle Fire will be practically useless when off the net. Not the case with the iPad.


    Finally, people will always want a faster, better experience. Windows computers have all but stopped selling not because the hardware has gotten too fast, but because there as really never been any innovation in Windows. People are waking up to realize this.


    The Mac users have almost all tried Windows. They buy the Mac because it's clearly better. This has always been the case. This is not the case of WIndows users, they mostly have tried to use what has been suggested or given to them.


    Kindle fire can't improve without lower component price or higher device price, and Apple will enjoy more of that than Amazon since they are selling orders of magnitude more devices.


    Once the losses from Fire start rolling in, expect Amazon's nosebleed P/E to get a real correction.


    Finally, Apple doesn't 'respond' to copyist followers and pseudo-tech companies like Amazon. They lead the way. Amazon is responding to Apple here, don't let your emotions get in the way of understanding the tech.
    3 Oct 2011, 09:19 AM Reply Like
  • Amazon takes a loss on the sale of the Fire tablet in the hope of future sales proceeds from Emusic, Emovies, and Ebooks...
    ...similar to how color printers are sold at deep discount against the future sales of ink cartridges.
    Apple has no need to resort to that business model. there a chance that the Amazon Fire is a rejigged RIM Playbook bought at "Fire"-sale bulk pricing ??
    3 Oct 2011, 06:38 AM Reply Like
  • It is stunning to me how frequently and consistently people underestimate AAPL and its impact on our culture and world. There is no device like the iPhone and nothing near to the iPad. I bought a Kindle last year (with the experimental browser) and barely touched it for months and sold it. It was a waste of time and hardly attractive or intuitive. I bought an iPad last month and it has been attached to me ever since. The thing is addictive. It is beyond intuitive and easy to use and -- this is what people never get -- it is attractive and fun to use!


    No company makes products like AAPL, just like no company streams content like NFLX and there is no online retailer that can touch AMZN. The case can be made that NFLX is &&&&ing up a ton, but that red screen means quality streaming just as the little bitten apple means expert technology.


    The Fire will die. The Apple will never fail (fall).


    I would bet that most people guessing on AAPL not keeping up don't own an iPad. It is sick how cool mine is.
    3 Oct 2011, 06:42 AM Reply Like
  • No one outside of Amazon has even handled these things. You can't get one until mid November. Best thing since sliced bread and the only thing anyone has done with one is seem the price tag.


    Maybe it will be awesome and kill the iPad like the Galaxy didn't.


    I looked on the Amazon app store for all my favorite iPad apps. Not a single one was there. Though, if all you do with it is play Angry Birds you'll be in great shape and it will be a great buy over the iPad.
    3 Oct 2011, 08:10 AM Reply Like
  • Saturday Night Live destroyed the Fire in joke three of Weekend Update last week. "The Fire will sell well. Among parents WHO ALWAYS BUY THE WRONG THING".


    Pretty much nails it. Current Kindlers will oooh and ahh of the idea of color and will tolerate the 3rd rate browser and dearth of apps/games. It will nibble the low end of the tablet market. It is unlikely to be a problem for Apple.
    3 Oct 2011, 08:12 AM Reply Like
  • The key to successul marketing of a product is not simply price but a combination of image, innovation and most importantly but forgotten by wannabes, customer service.


    Great customer service fosters trust and repeat business. Backed up by
    continued product innovation cements the deal. Try all the other tablet
    manufacturers' customer service departments; they cannot hold a candle to
    Apple. In my opinion competitors' CS departments stink, the right hand doesn't know what the left handIs doing. Some even treat customers with disdain, the calls to foreign call centers with fake American first names, the hangups, the swtching to one
    department then another, the insufferable wait times and in the end, often the non-resolution or owning up to the problem. Apple commands a premium price
    and owns the market for a reason: they deserve it. As long as Apple sticks
    to and can continue Steve Jobs' vision no competing company will touch
    them. The competition so far just doesn't get it having
    just addressed only one element of the marketing mix, the price and simply copied the iPad series with little if any innovation while ignoring customer service and the customer experience.
    3 Oct 2011, 10:45 AM Reply Like
  • Those worthless low end functioning tablets are just "fillers" in a market pretty much owned by Apple. People may buy one but once they see the limitations (no camera, no ports, etc.) they'll give them to their 6 year old.
    3 Oct 2011, 11:47 AM Reply Like
  • All tech in the end becomes 'worthless' and 'low end'. Steve Jobs is dying along with his tablet. Give it two years. It's already old hat and will be junked along with all the other new 'tablets' junked on top of them in heaps of rubbish along with all the old ColeicoVisions, rotting Zenith consoles and plastic hamburger phones.
    3 Oct 2011, 12:04 PM Reply Like
  • And especially PCs!
    3 Oct 2011, 12:34 PM Reply Like
  • PCs, fake brown paneling wainscotting, leaky old waterbeds with built-in stereos, 8 tracs, broken disco balls, torn up bean bag chairs, Ataris, roller skates, Jordache jeans and ... tablets, on top, the last thing thrown on, now falling down the side of the junk heap as the latest gay fad it was.
    3 Oct 2011, 12:41 PM Reply Like
  • Good luck finding any tablets on that pile just yet, most especially ones with an Apple logo. Someday, sure, but it will only be because they have been replaced by a better model, not because it was a fad.


    Is the internet a fad, too? iPad is just a new form of computer, that is all. It's not going to go away, least of which before the desktop does.
    5 Oct 2011, 04:02 PM Reply Like
  • Bro, its a laptop. Chill.
    5 Oct 2011, 04:04 PM Reply Like
  • I'd say it's significantly different from a laptop, actually. And even the research firms like to classify it as something else (so the Wintel industry, paying their bills, can ignore the iPads when looking at computer shipments.)


    Besides, if it's just a laptop, do you also think laptops are a fad? Makes no sense.
    7 Oct 2011, 12:05 PM Reply Like
  • Okay, its a glowing magic toaster then.


    All better?
    7 Oct 2011, 12:35 PM Reply Like
  • Yeah, I will quit trying to reason with you, it's futile. "Quoth the Junker, ...Nevermore"
    7 Oct 2011, 03:04 PM Reply Like
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