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As iPad-3 awaits launch, Apple cuts iPad-2 prices 17%

To take on Samsung Galaxy Tab models that start at about Rs 24,000

Priyanka Joshi  |  Mumbai 

With the third-generation iPad set to be launched in the global markets on March 16, Apple has announced the entry-level model of the iPad 2 will now cost Rs 24,500 (including VAT), compared to Rs 29,500 earlier.

Larger electronics retailers like Reliance Digital and Croma haven’t officially announced a price revision for the iPad 2 yet. Individual electronics shop owners who usually sell imported Apple devices have confirmed that they are now selling the 16GB WiFi-only model of iPad2 at Rs 23,333 (excluding VAT) and the 16GB Wi-Fi & 3G iPad2 model at Rs 31,333 (excluding VAT).

Frost & Sullivan data suggest the tablet PC user base in India increased from 60,000 in 2010 to 300,000 in 2011. The overall tablet PC user base is likely to grow at a compound annual growth rate (CAGR) of 107 per cent, to reach 23.38 million by 2017.

Apple, about 20 per cent of whose sales comes from the iPad, to both consumers and business users, will now compete head-on with the Samsung Galaxy Tab models, starting at about Rs 24,000 (best-buy prices). As the Indian tablet PC user base evolves, Apple, Samsung, Motorola and Research in Motion, besides many Indian tablet PC vendors, hope to multiply their sales. Last week, Microsoft, too, rolled out its Windows 8 operating system for tablet PCs, suggesting that Windows-based tablets should be counted as a serious competition to others in the segment.

Apple-authorised sellers Business Standard spoke to confirmed they had not yet received an official communication from the company on revision in iPad 2 prices. “Apple directs us on the price revisions, as discounts are something the company never offers. And, since the retailer margins are also very tight, you will never see an Apple device being sold at ‘discounted’ prices,” said an Apple reseller in New Delhi.

With the new iPad starting at $499 (about Rs 25,000) in the US markets, Apple has also added 4G wireless connectivity to its tablet devices and priced these iPad models at $629 (approximately Rs 316,00) and more. Though Apple has not announced an official date for the launch of its new iPad in India, imported electronics outlets say they would get the first batch of the third-generation iPads by the end of this month, from markets like Singapore and Hong Kong. “We haven’t decided the price at which we will offer the new iPad, as we need to factor in the expenses borne in bringing the devices,” said a Mumbai-based grey market electronics seller.

Analysts from research firm Canalys believe that Apple has cut the price of older models to attract bargain-hunting shoppers, even as it has unveiled a new product for the high-end consumers. “The iPad 2 price cut may have more significance to makers of cheaper tablets who haven’t been able to match Apple’s success,” analysts point out.

The price drop, reason analysts, is what Apple did when it introduced the iPhone 4S in October last year. The company reduced the price of the iPhone 4 to $99 and offered a two-year wireless contract for free with the iPhone 3GS.

While the price drop will draw new users to Apple, analysts estimate the new iPad, which supports 4G technology, will widen the tablet PC base when networks are rolled out in 2012. “Though the tablet ecosystem is at a nascent stage, the proliferation is expected to increase significantly with the launch of faster data technologies and growing awareness among customers. The success of tablets in India would depend on affordability, applications with vernacular support, and quality data connectivity,” observes Abhishek Chauhan, senior consultant (ICT Practice), Frost & Sullivan (South Asia and Middle East). The impending launch of 4G LTE services in India is expected to boost data usage in the country, ensuring availability of seamless internet connectivity at nominal prices, adds Frost & Sullivan.

According to CyberMedia Research data, nearly 158,000 media tablet PCs were shipped in the nine months ended June 30, 2011, with the split between 3G and WiFi models in a 70:30 ratio. The data also project that tablet PC shipments in the India market could have touched 275,000 units in the 2011 calendar year.

First Published: Fri, March 09 2012. 00:19 IST