Apple’s iPad is still the best tablet on the market, and today’s iPad 2 should be even better.
But Apple’s advantage over its Google Android rivals isn’t just quality, it’s also price. The iPad is still CHEAPER than many of its lower-quality competitors.
How does Apple do it? Forbes’ Eric Savitz summarizes a research note today from Bernstein analyst Toni Sacconaghi.
- Apple didn’t leave a pricing umbrella, and happily took lower margins on entry-level iPads. “Our detailed analysis of Apple’s margin changes over time suggests that iPad gross margins were likely 26% – 30% in the launch quarter; we think they have improved to 32% currently due to falling component prices.” (This is well below Apple’s company average. But it can afford to do that because iPhone margins are so high, etc.)
- Apple has advantages in scale and component purchasing.
- Apple sells a lot of iPads through its retail stores — about a third, he estimates — which not only don’t stock rival tablets, but also provide the company more profit than selling through partners.
- Apple’s home-designed processor also saves some money on each unit, versus buying chips from someone else.
Don’t miss: It’s iPad 2 Day! Here’s What You Need To Know