A rumor is just a rumor and should be taken with a grain of salt. But if the rumor leads to some considered analysis, then it’s the analysis that’s interesting, not the rumor. So while I don’t claim to have any inside information, I’d like to analyze the above rumor.
Apple got caught with its pants down at Christmas. There was a good-sized hole in Apple’s product line, Amazon discovered it, and used its financial muscle, vast portfolio of products for sale, and the understanding based on its Kindle experience to develop the Kindle Fire. Sure it’s a crappy little device, or so I’ve read, but Apple left a door open, and Amazon drove a truck through it.
What’s Apple to do? Recall that the reason Apple decided to launch the iPad in April was to even out the revenue by quarter. For a long time, it looked like Apple products were just Christmas toys, and that quarter, while it contained embarrassing riches, was also embarrassingly better than the other quarters. It would be good to even out Apple’s revenue and make every quarter a great quarter. And look like a really successful company all year round.
The Embarrassing Problem
The problem with that strategy, as Apple found out last holiday season, is that it gives Apple’s competitors nine months, accounting for product lead times, to come up with a holiday product that can successfully compete. Amazon did just that and provided themselves with a winning vehicle to sell their copious wares. Apple hosed up by focusing on revenue by quarter and not anticipating this Christmas counter move by Amazon.
What Makes Sense?
I suggest that it’s now logical for Apple to have a twice a year launch for iPad products. The “big” iPad is refreshed in March/April. That’s the flagship 9.7-inch, 2048 x 1536 resolution iPad 3 that we’re pretty sure is coming in a few months. It keeps the revenue high in that quarter.
Then, in the fall, Apple might come out with a lower priced 7.x-inch iPad, 1028 x 768 resolution, geared to a soft economy and Christmas season buyers. At a much more palatable price. Apple’s brand will pull a lot of those potential Kindle customers back to the mothership.
You may say that reducing the price on the iPad 2 to counter the 7-inch Nook Tablet, Kindle Fire, and others is a better strategy. I maintain that it’s a good stopgap strategy that will last Apple through the summer and into the fall. Remember, however, that the reason the Kindle Fire was successful was not only the price but the ease of holding it with one hand while reading. That has huge appeal to many people. So the strategy of a lower price iPad 2 this summer is, as I see it, not a permanent strategy, but a temporary strategy to make up for the door that was left open to Amazon.
Anyway, these are my thoughts. As I said, I don’t claim to know what Apple will do, but I think it’s interesting to speculate logically on recent events and how Apple could counter Amazon. After all, once you leave a competitive door open, everyone else, Samsung, Amazon, and Google, will continue to drive a wedge into that open door, form a new beachhead, and expand on it. Apple has to put a stop to that ground assault, and an iPad 3 in March/April 2012, alone, won’t do it.