A new study by iGR says that for competing tablets to match Apple’s (NASDAQ:AAPL) iPad sales, they will have to be priced much cheaper than the iPad. Further, it goes on to add that a vast majority of the respondents preferred the iPad, and it would take a discount of well over $100 to convince them to buy a rival’s tablet. [1]
See our complete analysis for Apple stock here
A base model of iPad currently sells for $499 and it seems Apple enjoys a pricing advantage over its rivals such as the Motorola (NYSE:MMI) Xoom, the Samsung Galaxy Tab 7-inch or the HTC Flyer. Only the Kindle Fire is priced cheaper at $199, and at this price, it has been selling like hot cakes.
However, we do not believe Kindle or for that matter any 7-inch tablet is a direct competitor to Apple’s iPad because of the design issues with its 7-inch size as discussed in an earlier note titled Do 7-inch Tablets Stand a Chance?.
We have a forecast of Apple slashing iPad prices in the face of increasing competition from its rivals in our model. However, if the company finds its iPad sales unaffected due to competition, it may not feel compelled to decrease its price in the near term.
Our $500 price estimate for Apple stock is about 20% above market price.
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Notes:- New iGR Study Quantifies ‘Apple iPad Price Premium’ Compared to Android Tablets, October 18th, 2011 [↩]
