NPD: Expanded distribution of iPad 2 could be Apple's key to success

Posted:
in iPad edited January 2014
Exploring alternative retail partners like Kohl's or Bed Bath & Beyond for the next-generation iPad could give Apple another advantage over its competitors in the booming tablet market.



Stephen Baker, vice president of industry analysis with the NPD Group, wrote about the anticipated launch of the second-generation iPad on his company's official blog on Tuesday. He said he believes distribution and availability of the touchscreen tablet will be an even more important factor than technical specifications for the next-generation device.



"As Apple talks more about small businesses and the iPad opportunity in enterprise it would be great if distribution focus was expanded to include more business-oriented channels like the office stores and the DMRs, such as PC Connection and Insight," he wrote. "Those chains and resellers offer Apple real chances to gain incremental volume versus shoveling a couple more units through carrier stores or adding another Web site.



"Although, even in its consumer focus, Apple's distribution clearly needs to expand into more regional CE outlets and test more alternative distribution opportunities like department and home stores, such as Kohl's or Bed Bath and Beyond."



Though the first-generation iPad was initially only available through Apple, the company gradually expanded its availability as 2010 went on. By the end of last year, the iPad was on sale from a number of partners, including carriers Verizon and AT&T; retailers like Target, Best Buy and Walmart; as well as third-party distributors.



In addition to distribution, Baker said he believes pricing of the next iPad will be a "critical" decision for Apple. This year, a plethora of tablet competitors running a variety of operating systems are set to hit the market and aim to unseat the iPad as the best-selling tablet device.



With tablet competition looming, Baker sees device makers competing for shelf space and an inevitable price war. If the iPad 2 launches with too high a price, Apple could potentially be undercut by a less expensive competitor at some point before the holiday buying season of 2011.



"Since Apple never responds to that type of price activity," he wrote, "the key to iPad 2's announcement will be whether today's price holds or Apple is the first one to shoot off a canon in a tablet price war."



For the moment, the pricing of Apple's iPad remains an advantage over its competition, with the 16GB Wi-Fi-only model starting at $499. Apple executives have said they see the tablet market as an important sector with huge growth potential, and they plan to be aggressive in terms of pricing.
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Comments

  • Reply 1 of 50
    bcahill009bcahill009 Posts: 163member
    Although I would question the help you would get in these stores (kohls, bb&b) it makes sense to have more distribution outlets



    The iPad, like the iPod is so well known, it mostly sells itself, and there are few potential customers that don't know enough about it to make a decision to buy.



    What is interesting is that right now there are only masculine (ie. best buy) and neutral (ie. target) stores. Adding feminine (ie. bb&b) outlets could certainly help.
  • Reply 2 of 50
    smiles77smiles77 Posts: 668member
    Quote:
    Originally Posted by AppleInsider View Post


    "Since Apple never responds to that type of price activity," he wrote, "the key to iPad 2's announcement will be whether today's price holds or Apple is the first one to shoot off a canon in a tablet price war."



    That would be cannon*, not a song. Also, my thinking is that they will keep the same pricing for iPad 2 and then decrease the lower models' prices when they introduce iPad 3. Keep the margins now and push the envelope this fall, when the two versions will hit a large amount of the consumer markets.
  • Reply 3 of 50
    wigginwiggin Posts: 2,265member
    "such as Kohl's or Bed Bath and Beyond"



    And just how would such a store market and position the iPad in their stores. Last time I checked, BB&B doesn't have an electronics department. Not sure if Kohl's does. I know, maybe the iPad can be put on display with the electronic photo frames!



    More distributation channels would be great, but I think the ones this analyst suggests would relegate the iPad to "commodity" status. No way Apple does that.



    "or Apple is the first one to shoot off a canon in a tablet price war"



    I almost laughed out loud when I read this. First, the iPad is already lower priced than the competition. And second, has Apple ever participated in a price war? Much less actually start one?
  • Reply 4 of 50
    luisdiasluisdias Posts: 277member
    Ok now Apple is starting to freak me out. If they keep going like this the next decade will be all Apple's.



    It's almost as if the last two decades of utter brutal competition in the pc market towards apple skinned this company to its most efficient backbone, which is now fighting back.... and kicking ass.



    I wonder, who will stop this monster that threatens to dominate the next decade in computing?



    Just for this I hail Google, that probably has delayed and diminished the level of domination...
  • Reply 5 of 50
    boeyc15boeyc15 Posts: 986member
    Pardon the interuption - I got a question - why is it everytime I get on this website lately there is an ad for XOOM next to the topics???? Can it at least be buried at the bottom or something?!



    Sorry, carry on.



    Back to topic - if iPad2 looks appealling (eg I feel whimsical) I may just purchase one tomorrow... but not at BB&B type location. Prefered locations are local tech stores Apple store or Best Buy. and if I have to, Radio Shack. Now if Sears had it, ya, that would be ok. But since Apple store is near by... might as well go there. All depends whats around.
  • Reply 6 of 50
    prof. peabodyprof. peabody Posts: 2,860member
    Quote:
    Originally Posted by Smiles77 View Post


    That would be cannon*, not a song. Also, my thinking is that they will keep the same pricing for iPad 2 and then decrease the lower models' prices when they introduce iPad 3. Keep the margins now and push the envelope this fall, when the two versions will hit a large amount of the consumer markets.



    There is no evidence that there will be an iPad 3 this fall though, yet there is concrete evidence that the original iPad model has been discontinued.



    I'm not saying it won't happen, just that this analogy is built around the idea that iPad will be sold like the iPhone where they have two models on sale most of the time, and have "last years model" being sold at a discount. So far we have no evidence that this is going to be the case at all, and the discontinuation of production on the original model suggests the exact opposite.
  • Reply 7 of 50
    [/QUOTE]



    Though the first-generation iPad was initially only available through Apple, the company gradually expanded its availability as 2010 went on. By the end of last year, the iPad was on sale from a number of partners, including carriers Verizon and AT&T; retailers like Target, Best Buy and Walmart; as well as third-party distributors.



    [/QUOTE]

    Just to clarify Best Buy had Ipad 1 during the first week of the launch; limited quantities.
  • Reply 8 of 50
    Really? Maybe next to the "As Seen On TV!" products like the device that trims your pet's claws? Sounds like a great idea for the Apple brand. Not desperate at all.



    This reminds me of the irrelevant, out of left field, nonsense that John Dvorak pumps out every so often. My favorite was the post from a few years back where he sternly cautioned apple to abandon their rumored plans for an iPhone before it was too late to prevent a humiliating fiasco.
  • Reply 9 of 50
    Quote:
    Originally Posted by bcahill009 View Post


    I would question the help you would get in these stores (kohls, bb&b)



    That's what's stunning about this idea. Apple believes they have created a highly sophisticated computer whose operation is so self-evident that it requires no more hand-holding or indoctrination than - a bath towel.



    Who knows, they may be right.





    Quote:
    Originally Posted by Wiggin View Post


    has Apple ever participated in a price war? Much less actually start one?



    In their entire history, they've never been so well-positioned for a price war. They know they can sell millions of tablets. Their competition is not so sure. So Apple can commit to huge purchases, then undercut their competition on price and yet STILL make money. "Better AND cheaper" is a pretty lethal combo.
  • Reply 10 of 50
    tt92618tt92618 Posts: 444member
    Quote:
    Originally Posted by AppleInsider View Post


    With tablet competition looming, Baker sees device makers competing for shelf space and an inevitable price war. If the iPad 2 launches with too high a price, Apple could potentially be undercut by a less expensive competitor at some point before the holiday buying season of 2011.



    When has Apple's channel strategy ever been about being the price leader? It just so happens that when Apple introduced the device, they had the lowest price... which is unsurprising, since it was the only device in its class in mass market distribution at the time. It's easy to be the price leader when you are the only seller.



    The assumptions here are wrong. If applied to Dell or HP the analysis might make some sense... but this is not Apple's strategy and never has been.
  • Reply 11 of 50
    desuserigndesuserign Posts: 1,316member
    Quote:
    Originally Posted by AppleInsider View Post


    Stephen Baker, vice president of industry analysis with the NPD Group . . .



    Move along.

    This guy's an idiot who is babbling about things he doesn't understand. He's acting as if iPads are comoditised chochkies. Next thing you know he'll suggest they offer iPods with Happy Meals.
  • Reply 12 of 50
    oc4theooc4theo Posts: 294member
    Hell NO!



    Apple is not that desperate. iPad does not belong in such a place. Office Depot & Office Max, may be. Not Khols or Bed & Bath.



    Hello? This is a computer product. With an Apple Logo. This guy must be out of his mind. It sounds like what that shit-head did to Apple when Steve was away.



    HELL NO!
  • Reply 13 of 50
    brookstbrookst Posts: 62member
    Quote:
    Originally Posted by OC4Theo View Post


    Apple is not that desperate. iPad does not belong in such a place. Office Depot & Office Max, may be. Not Khols or Bed & Bath.



    I don't understand the objection. Do you think Apple would sell fewer iPads, in total, if they offered them at BB&B? Or do you think it would be so damaging to the brand that people who would otherwise have bought one will refrain just because they know it's available there?



    I don't see any argument for narrowing distribution. It may be that it doesn't work, and sales are low-to-nothing, but I don't see the harm in trying.
  • Reply 14 of 50
    anantksundaramanantksundaram Posts: 19,051member
    Quote:
    Originally Posted by DESuserIGN View Post


    Move along.

    This guy's an idiot who is babbling about things he doesn't understand. He's acting as if iPads are comoditised chochkies. Next thing you know he'll suggest they offer iPods with Happy Meals.



    Spot on.



    Move along, folks..... it's just analysts running rampant.
  • Reply 15 of 50
    Reading this made me squeek with joy, not only as an AAPL holder but as an iPad 2 very early adopter (no matter what the price, I'm ordering tomorrow since my other apple products are on their last legs). This thing is going to be at least $100 cheaper, that's me calling my shot.
  • Reply 16 of 50
    Quote:
    Originally Posted by bcahill009 View Post


    Although I would question the help you would get in these stores (kohls, bb&b) it makes sense to have more distribution outlets



    The iPad, like the iPod is so well known, it mostly sells itself, and there are few potential customers that don't know enough about it to make a decision to buy.



    What is interesting is that right now there are only masculine (ie. best buy) and neutral (ie. target) stores. Adding feminine (ie. bb&b) outlets could certainly help.



    I can easily imagine an iPad as a casual display element in a store window or an in-store arrangement of furniture. It is almost pure eye-candy.
  • Reply 17 of 50
    Quote:
    Originally Posted by LuisDias View Post


    Ok now Apple is starting to freak me out. If they keep going like this the next decade will be all Apple's.



    It's almost as if the last two decades of utter brutal competition in the pc market towards apple skinned this company to its most efficient backbone, which is now fighting back.... and kicking ass.



    I wonder, who will stop this monster that threatens to dominate the next decade in computing?



    Just for this I hail Google, that probably has delayed and diminished the level of domination...



    I am not sure what you mean by "kicking ass". In the past year Apple has gone from the #2 most prolific smartphone in the world to #4. In that same year Android phones have gone from almost non-existent to number one. Apple presently has about 3-4% of the PC market, and a large but rapidly dwindling market in media players. The only market in which they are still doing well is the, only one year old, tablet market, in which they have existed with essentially zero competition until a few days ago (Xoom). In the coming months Apple will lose more market share in smartphones, lose most of their market share in tablets, lose more and more Ipod users (since any smartphone today does everything that the Ipod does), and lose a substantial portion of the laptop market. I would hardly call that kicking ass.
  • Reply 18 of 50
    bcahill009bcahill009 Posts: 163member
    Quote:
    Originally Posted by captbilly View Post


    I am not sure what you mean by "kicking ass". In the past year Apple has gone from the #2 most prolific smartphone in the world to #4. In that same year Android phones have gone from almost non-existent to number one. Apple presently has about 3-4% of the PC market, and a large but rapidly dwindling market in media players. The only market in which they are still doing well is the, only one year old, tablet market, in which they have existed with essentially zero competition until a few days ago (Xoom). In the coming months Apple will lose more market share in smartphones, lose most of their market share in tablets, lose more and more Ipod users (since any smartphone today does everything that the Ipod does), and lose a substantial portion of the laptop market. I would hardly call that kicking ass.



    When they continue to sell more and more devices while maintaing the best margins by far in the industy market share has very little meaing. The numbers can be favored either way, but in business revenue and profit mean more then market share.
  • Reply 19 of 50
    apple ][apple ][ Posts: 8,432member
    The iPad is already a success, there's no need for any advice from any analyst.
  • Reply 20 of 50
    kubekube Posts: 40member
    Quote:
    Originally Posted by Alladdinn View Post


    I can easily imagine an iPad as a casual display element in a store window or an in-store arrangement of furniture. It is almost pure eye-candy.



    Yesterday I saw the best iPad advertisement. Most of it was an iPad running an app showing features of a car (Kia, I think). then the narration said,



    "It's not an app, it's our user guide" and showed a hand putting the iPad in the glove compartment.



    (at least that's my memory).



    Point: You'll see iPads in lots of places. Good for them; good for us.
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