Apple Urged to Cut iPad Prices to Maintain Sales Growth
Apple has sold 40 million iPads since the 2010 launch, however, one pundit suggests that this trend is something that will slow. Because of the tremendous growth of the iPad in the first 20 months of it’s release, it dominates 97% of web traffic through tablet devices. This bar is so high, that there are few alternatives in order for Apple to maintain this degree of success. Goldman-Sachs analyst Bille Shope suggests that Apple’s best bet to maintain its dominance in tablet devices is to cut the price of certain models of the iPad. For instance, years ago, the iPhone sold for $600, but not enough people could afford it, so Apple lowered it to $400, and then allowed some lower quality models with less memory and capabilities to sell for $199 or less. This is analogous to the iPad sales, so Shope suggests that Apple makes iPad models with less capabilities and sells them for cheaper, or risk losing sales growth.
This relates to what we have been doing in class because Apple is a company selling iPads, attempting to maintain its sales above the tipping point of information cascade. If sales drop below a certain point, information cascade could become prevalent and engender a mass company switch from Apple to a cheaper competitor’s product, such as Android-based tablets. Apple must use its knowledge of information cascade to predict the tipping point of the market and keep their prices at as optimal a value as possible such that they continue to see profit as well as sales growth. If ever Apple gets too greedy and focuses too much on profits, they could lose sales and in the long run, lose significantly more profit due to information cascade.
http://www.pcworld.com/article/243886/apple_urged_to_cut_ipad_prices_to_maintain_sales_growth.html