Apple rumored to be secretly shipping 'iPad 3' as Best Buy cuts iPad 2 by $50

The Chinese aim to spoil all of Apple's surprises

The iPad profit margins for retailers must be higher than $50 and even $70. Or is that a wrong assumption?

Apple could have simply dropped the wholesale price by that much.

On an iPad, it might be close to those numbers, but that is a wrong assumption when it comes to most of the "big" things. Laptops, retailers typically lose a few dollars, trying to make them up on the warranties and services. TV's are the same.

Retail margin on ipods was around 5% here, at least on the midrange touches. Its possible that the margins are higher on the ipad, but considering apples profit , I dont think so.

Could be. Or it could be that Apple allows them to sell a lot of product for 12 months at lower profit margins than that with the warning that when the new one comes out, Apple is not responsible for making them whole. IE, they buy the product from Apple for, say $479 and sell it if they can, and if they can't, they are stuck with it. Given how popular the iPad is, I don't know if I'd say that's impossible, though I imagine most electronics are not resold in this way. But most electronics makers do not have a full price retail store of their own so they can't dictate terms like Apple can.

I'm sure BB expects to make its big profits selling protective cases, headphones, stands and the like. So the iPad is a loss leader.

There were claims a couple weeks ago (at least) that the third-gen iPad would be available to buy almost immediately after it's announced. This really isn't new as far as rumors go.

Those are just rumours which probably started as guesses.

The iPhone 4S was announced and demoed on day 0, then pre-orders started on Day 3 with delivery and in store sales on day 10, with many getting deliveries on day 8 and 9. From that I think it's not crazy to expect a similar release cycle.

Yeah Announcement mid-week, pre-order Friday, in store Friday would be nice and keeping w/recent history. If they announce on the 7th and start pre-orders that day, they wouldn't be able to get them to people by that Friday, unless they are already storing a bunch around the country by the announcement day.

It is a wrong assumption. Sometimes when a new product is released, the manufacturer will rebate an amount of the purchase price to the stores, of stock less then 30 days old. This encourages the stores to keep some inventory even in the face of rumored new product. This "rebate" is not a certainty, nor is the amount all that certain, and it usually comes AFTER the new product is announced. So, if any company is offering a discount now, it is betting on the rebate to some extent.

So, while the store may be selling the current inventory below their current cost, they may be doing so with an expectation of some money flowing back to them from Apple.

If, for example, Apple is planning on offering the current iPad2 at $100 less then the current price, this practice of offering $50 to $70 off the old inventory will ease the pain somewhat for purchasers this close to the iPad3 announcement who may be looking for a deal on iPad2s.

It's funny how they can keep a lid on Democracy and freedom without batting an eye, but they fail to contain industrial espionage.

Sure shows where the priorities of the country are.

You are correct in regards to history.

However, me thinks that Apple may be changing the way that they do things in the future. Many different things.

Imagine the end of the iPad 3 announcement:

"...and that, is iPad 3.
So when can you buy this?
Today.
Right now.
In the foyer on your way out.
I'd like to thank you all for coming."

Collective gasp, then...

Wild. Fucking. Stampede.

(Of course, I could be wrong )

Unfortunately, industry is not allowed certain privileges that governments have.

I could tell you what they are, but then I'd have to kill you.

You're appealing to my desire which makes it hard to disagree. I hope you are right but I have to think a more staggered release is better. It gives Apple some breathing room, prevents someone in one of their stores or affiliates would spill the beans before the announcement as the boxes would have to be in the stores the night before, and they also can dominate the tech news with multiple days of iPad released media, not just one major day.

I suspect that this is the case. I also suspect that the third party retailers are no more forewarned of release dates than the public is and they fear that the rumors are true and are trying to purge their stocks, even if at 'cost' to avoid having to lose money after an announcement to get rid of units

As for the 'secret' shipments, I don't recall Apple making a habit of announcing shipments, especially prior to a launch announcement. For security reasons. So are these really 'secret' at all or just the same as always and not put out into the world to be stolen in route. That is if the documents aren't simply totally fake. consider if they were real how pissed off Apple would be over the leaks. Who is crazy enough to risk the wrath of such a prominent company

They're using UPS?

I hope that they're not as incompetent as the UPS people who deliver packages in my area. They don't even bother to ring the bell half of the time, they'll just leave your shit unattended in the lobby of a building.

.. or drop-kicking it from the sidewalk to your door. The post office prefers the overhand toss, while FedX place-kicks it from the floor of the van.

Apple uses UPS for shipments to Apple Stores, but FedEx to ship to customers. B2B shipments are treated at lot more professionally by UPS, for the simple reason that lost or delayed shipments to restock inventory can permanently lose their account with Apple. AS IT SHOULD BE.

The fact that Amazon ships UPS while the Apple online store ships FedEx is the main reason i ALWAYS buy from Amazon if I can. I must be lucky, the UPS guys in my area always beat the estimated times by at least a couple of hours, always ring the bell, never leave something that needs a signature. OTOH, the FedEx guys here have, on three separate occasions, failed to deliver my packages, fail to leave a note of attempted delivery, and then the office fails to call me about my packages. I have had to call FedEx to see what was going on, when they've been sitting in the offices for the past 2 days!

... or you could just wait until after the 3 is released. If they repeat last year's sale, you'll be able to pick up a 64gb model for 349 from AT&T a few days after the latest model is released.

I've had the exact opposite experience as you've had, which is disturbing seeing how UPS's second largest freight hub is located 2 minutes down the road from my house. Every item I've ever purchased from Apple directly also came UPS. My wife's 4S came Fedex, but it was a widely known fact that Apple had to use both carriers to make sure those things made it to their customers as quickly as possible.

My last UPS delivery saw the guy actually ring my buzzer. I immediately got up and went to the door and he was already putting the ticket on my door.

If it is already at Best Buy then is this a ho-hum release or is Cook just trying to avoid the spotlight? His VPs can put on a good show.

You seem to not have read the title. Or the article.

Yeah, just picked one up just now. If it didn't have a 3 on the box I couldn't tell it apart from the 2. Same resolution, same everything, but for some reason it's twice as thick and heavy. Dissapoint.

You must have picked up the Samsung model.

My nephew works for Best Buy. They were told to clear the shelves by the 7th of March to make way for a new Apple product.

The iPad 2 is on Craigslist tonight. Hopefully I can find some sucker to pay me close to what I paid for it so I can turn around a get an iPad 3.

Well lately they've been a real pain in the ... Why stop now?




Given the thin profit margins, it's likely that Best Buy has had some info that something is coming, and it is possible that Apple will be giving them a rebate. When I worked at a Apple Premium Reseller we got price protection, but usually only ~after~ the new line is announced. There was a lot of paperwork and perhaps due to staffing issues, in perhaps many cases I think the company just absorbed the loss ~ quite easy to "clear" old stock because it's pretty much the same Apple product as yesterday except cheaper. You take a hit on the profits but you turn over the stock and get cash coming in... I know, not the best strategy but that's what they chose.

However, again, being Best Buy, they probably have a little more info from Apple. It's very unlikely they will just cut prices and hope for the rebate without a strong indication from Apple. I agree too that their margin is definitely no more than $50 (because that's around 10%!), meaning if they are going purely on rumours they are selling at or below cost.



Oh yeaahh, I'm feeling "It's available... NOW in the US", 1 week later 1st tier country launch [ie. including Australia as usual hopefully!]

Yes, because he's a spammer.

Wo I would have never thought of that, sure I estimated the prices to be very competitive in margin but losing as well, interesting....

I imagine B2B deliveries for hardware are by trailer truck, not the traditional Brown Santa.

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They've been doing this for well over a week. I was at a Best Buy owned store (FutureShop) and all the iPad2's were already discounted 50$.

And typically the markup on computer equipment is very small, as the employee discount program is like cost+15%, it ends up being cheaper to just pay the retail price for software, games, dvd's and computer hardware. They make their profit on product bolt-ons like cables, product service plans, and whatever else the sales people can stick you with. Futureshop isn't that different from Best Buy, other than Futureshop always being understaffed.

Whatever the margins are or what Best Buy knows or thinks it knows, interesting that no one (I noted) has commented on the possible implications of Apple's "expanding the line" - as they have with keeping discounted models of the previous phone versions around.

Note: One reason Apple might not keep the iP 2 around as it's been doing with its phones could have to do with the different economics of contract phones vs. non-contract iDevices. That's above my economics grade to figure out - but it's been a great strategy on the phone side.

Partly brilliant because by designing/engineering/building right in the first place and updating via software designed also for the current model, their old models are still competitive with new Androids for

zero R&D/retooling to "create" "new" lower-priced models! And that slashes the margins of competitors who bring out a dizzying array of models every few months - meaning those designs are also inherently more "slap-dash" - i.e., tossed together with less engineering and production love. Few other companies - at least those that are either selling in volume and/or making money in the mobile space - put a year into each new model iteration (nor in a lowest common denominator clone market can they).

A diamond is a joy forever. An Apple device is a joy for years. And most new Android devices are mixed blessings for but a few months before seeming dated by the next piece of plastic whose OS is unlikely to ever be updated. If the target price of a "new old" iPad is $399 (only in 16GB/non-3G and possibly a bit of other economizing inside if that's feasible without much compromise) - with the "production experience (including original design and production ramp-up expenses)" long amortized, they can:

a) cut the entry price into the family by 25% which will still blunt 10" price competitors without too much of that famous "cannibalization" of their own new base model iPad 3 (and so likely a net customer gain offsetting slightly lowered revenue/pad).

b) still make good $/unit even while cutting off the oxygen of competitors and expanding the user base/unit market share.

As for why not lower, $399 is still not in Kindle Fire/Nook range - but closer enough to tip some fence-sitters hovering on the price/value/affordability sidelines. Whereas $299 wouldn't capture many more of these (and would nick Apple's net margins), and except for $49 itself, Apple seems to prefer prices ending in $99 rather a number like $349.

The situation would be different if Apple were really facing strong competition in the tablet market instead of closer to monopoly scrutiny. There's simply no pressure on Apple to market a loss leader and while Apple's happy to sell you accessories, upgrades, software and content, they've never been a "give the razors away to sell blades" kind of company (which is the Kindle Fire biz model).

As for any possible tweener (e.g. the rumored 8") pad - I don't see it at the announcement of the iP3 - if ever - but I still feel that leaving the entire 3.5"-9.7" screen size range unoccupied by any Apple product is a condition that Apple knows they must remedy eventually, as there are a number of niche markets and maybe some mass ones for which such sizes can be sold in profitable volumes.

And with iPod sales actually declining, Apple will either reinvigorate the line in some manner - or start treating it as a limited-lifetime "legacy" business they may keep only one or two models in. This is pointed to by the lack of any real updating to the Touch last year. So if Apple doesn't want to either compromise the size of screen elements on the iPad line - or make developers write for a third resolution, a bigger (likely less "retinized") iPod Touch - with screen elements larger than the current ones on the touch and phone - remains at least a possibility. (As does a 3.8" iPhone close to the same overall dimensions of the current 3.5" model, hovering just around the 300 ppi line.)

Anyway if Best Buy's holding a fair amount of inventory, they'd rather move it at $449 (and clear out discontinued higher models) now than after a $399 version comes out.

Don't think so. Retailers drop price by a bit now because they know once iPad 3 is on sale, they would have to discount the iPad 2 by a much larger margin to move it. They just want to clear out their iPad 2 stock as much as possible.