Our favorite Mac maker just killed off an iPad model (the original iPad 2) and replaced it with the iPad 4 (the first with the Lightning connector), priced at $399. I’m not sure whether I should be embarrassed for Apple or for their competitors. Or, both. Or, neither. As if that wasn’t odd enough, Apple did something worse with the iPhone 5c.
What’s Old Is New Again
Apple claims to have a rather tight supply chain so most products don’t gather dust in warehouses before being shipped off to stores to a line of eager customers.
Think about it, though. Apple’s iPad Air and iPad mini are the darlings of 2014, ostensibly selling well, but Apple kept the old iPad 2 around as the price leader.
That’s been replaced by the much better iPad 4 16GB version at the same price points, a two-year-old model that’s still priced higher than any competitor.
I don’t know if Apple is desperate to move unsold inventory, or brazenly optimistic about what customers are willing to buy, or the ultimate clever fox among the chickens.
Who sells two-year-old products for more than their nearest competitors?
Wait. It gets worse.
In Europe, Apple just began selling the iPhone 5c in an 8GB model for nearly $70 less than the 16GB model. Is Apple feeling a pinch of competition at the lower end of the premium smartphone and tablet market?
Yes. This is known as product pricing migration, whereby a lower priced product serves as the gateway to migrate customers to higher priced models.
The lower priced products are usually entry level, appeal to those customers who are price sensitive but want a known brand, and don’t shop for products based upon feature sets.
What’s In A Model?
The 16GB iPad 4 and 8GB iPhone 5c fit perfectly in that strategy. Because the lower priced iPhone 5c is essentially last year’s model, it could be that Apple isn’t selling as many of the entry level iPhone 4s models as planned.
For a company that tells the world that Apple’s products are all about user experience, I wonder how many users will feel penalized with a smartphone that has a mere 8GB of storage. That iPhone won’t hold more than a few dozen songs, a few hundred photos, a movie or two, and a dozen additional apps.
The iPad 4 at $399 shows how much Apple values the lower end of the premium segment. It should embarrass Samsung, Microsoft, Google, Amazon, and crowd that Apple can sell more two-year-old iPads for more than their latest tablets.
Is Apple desperate? Or, clever? A little of both.