Newsletter Issue #781: The Demands That Apple Build Cheap Gear

November 17th, 2014

There’s a published report from IDC claiming that cheaper tablets are driving growth in the market at the same time that iPad sales have continued to decline. So total shipments, which include those $59 pieces of junk sold at Walmart, reportedly grew 15% in the last quarter. The average price dropped to $294, 13% less than last year.

Now I don’t presume to know what customers expect from cheap tablets, or whether the decisions are made on factors other than price. If a tablet is meant as a cheap consumption device, for reading and watching videos, I suppose there are plenty of choices. Consider an Amazon Kindle, which is decent enough for such purposes. Amazon manages to keep the prices low by giving up on potential profit, hoping that sales through their online storefront will make the difference.

I wouldn’t guess how well the Kindle is doing, except to say that Amazon doesn’t break out the sales figures. We do know that the Fire Phone was a huge failure, and it was the one Amazon gadget that was sold for full price at first. It’s now 99 cents with a two-year AT&T wireless contract. In any case, it’s not that Apple is unaware that people are looking at price tags when they buy tablets, even if they are giving up on performance and the ability to use nearly 700,000 tablet-optimized apps from the App Store.

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