New iPad Air Now Shipping From China Ahead of Announcement

[ric22]

That's what many people don't realize. Apple's gross hardware margins are in the mid to high 30% range. We don't know how much comes from the higher margins of upgrades, but given the prices Apple charges for upgrades, it's likely gross margins are lifted substantially by those upgrades. Even if it's only 5% overall, for a margin-seeking company like Apple (which has always been the case for Apple, even back in the early 1980s), that's a substantial increase that keeps the base models less expensive than they otherwise would be.

Many companies function this way. The $3 hamburger at a fast food restaurant will almost always have lower margins than the $8 hamburger. The $30,000 sedan will almost always have slimmer margins than the $75,000 truck. The base model of a car will almost always have slimmer margins than the "Limited" model with various upgrades.

Margins are padded by upselling. That's not just an Apple thing. Yes, many people would rather Apple just give their products away or have much slimmer margins, but Apple is also a competently run business. Some consumers might not like that, but it's one reason Apple is a highly profitable, influential, and successful company.

I think the bigger issue is the extreme change in real value of the upgrades that Apple offer. When Apple used to offer RAM/SSD upgrades and added 100-200% on to the 'real' cost that was one thing. The fact that their SSD upgrades now incur a 1,000-4,000% up-charge is kinda nuts.

It's been evident for a long long time that their hardware sales model involves drawing profit from SSD/RAM upgrades, but times change, and it's now a poor look for a premium brand. It's why many posters regularly (but technically incorrectly) throw around the term "price-gouging". I'm not sure what the solution is, but as RAM/SSD continue to lose their remaining value, it's becoming a poor and outdated strategy for differentiation amongst the product lines.

Hardware across the industry is getting so powerful and well specced that the main selling point for Apple has to be their software (and improved privacy). How they differentiate between a heap of products in each product line when they're all essentially excellent is difficult. It's hard to gimp the base spec models in ways that much cheaper competitors don't.

 

[hans1972]

Regarding 64GB entry models, people forget how many of these are bought in bulk for the education sector, and those devices really don't store anything on them except apps.

And so many people here wants to store everything they have on their device. Many regular user's don't mind using iCloud Photo Library to store photos and videos in the cloud to offload the storage need for the device.

 

[ric22]

I agree, but budget models doesn't seem to be Apple's style.

The education sector already often buys older models of iPads and Macs at discounts. But they're losing that market quite dramatically, in the US and internationally, as Apple products look like poorer and poorer value for money. There's very many articles on the subject online. Offering cheaper and lower specced devices purely for the education sector could be a sensible way to entrench their currency position, while the lower profit can be considered largely offset by the value gained in introducing children and teenagers to the eco system- effectively grabbing an opportunity to market to future buyers.

 

[EugW]

Yes, but the current difference between a 10th gen and iPad Air 5 is $150.
So your price list wouldn’t make Tim very happy.

Maybe they can add Face ID to the iPad Air? Or maybe they could just keep the iPad Air at $599 at the same price.

 

[MacTwick]

Software is what needs updating, not the hardware. So many bugs.

Agreed, but Apple doesn't sell software, they sell hardware. Gotta get that bag somehow!

 

[joeblow7777]

And so many people here wants to store everything they have on their device. Many regular user's don't mind using iCloud Photo Library to store photos and videos in the cloud to offload the storage need for the device.

That's true as well. For many users an iPad is solely a cloud/streaming device. They only need enough space to install their apps.

 

[deevey]

Are they still going to rip us off with 64GB base storage and have the only upgrade option be 256GB which is overkill for many people. Why not offer a 128GB version?

I like the iPad but the line up is a mess.

Because it forces customers to consider the 128GB Pro instead of the Air for "a couple extra bucks".

 

[hans1972]

Apple designs its products and price-points for maximum profit first and foremost. End of story.

True, but as a customer I don't care and I don't think other customers should care either.

I care about what I have to pay Apple for the configuration I need/want and if it's worth it. If it's not, I don't buy it.

It makes the buying process so much more simpler and emotionless.

 

[joeblow7777]

The education sector already often buys older models of iPads and Macs at discounts. But they're losing that market quite dramatically, in the US and internationally, as Apple products look like poorer and poorer value for money. There's very many articles on the subject online. Offering cheaper and lower specced devices purely for the education sector could be a sensible way to entrench their currency position, while the lower profit can be considered largely offset by the value gained in introducing children and teenagers to the eco system- effectively grabbing an opportunity to market to future buyers.

Chromebooks in particular are making a killing, but there are some things that the tablet form factor and functionality are better suited for, and Google and other Android manufacturers have pretty much given up on that, so iPads are the one Apple product that are still pretty popular in schools, at least in my (Canadian) experience.

 

[boak]

I think the bigger issue is the extreme change in real value of the upgrades that Apple offer. When Apple used to offer RAM/SSD upgrades and added 100-200% on to the 'real' cost that was one thing. The fact that their SSD upgrades now incur a 1,000-4,000% up-charge is kinda nuts.

Pricing is not based on % of markup. It’s typically based on the minimum perceived value by a sufficiently large number of consumers.

 

[boak]

My guess:

iPad - Starts at $399 (64 GB)
iPad mini - Starts at $499 (64 GB)
iPad Air - Starts at $599/$799 (64GB), with additional 128 GB option
iPad Pro - Starts at $999/$1199 (128 GB)

 

[klasma]

It makes the buying process so much more simpler and emotionless.

“Emotionless” is the antithesis to Apple though.

 

[EugW]

My guess:

iPad - Starts at $399 (64 GB)
iPad mini - Starts at $499 (64 GB)
iPad Air - Starts at $599/$799 (64GB), with additional 128 GB option
iPad Pro - Starts at $999/$1199 (128 GB)

At those iPad Pro prices for 128 GB, I will simply not buy.

That seems unrealistically high.

 

[Brandon1988]

"The new iPad Air with a higher storage option". The base model will still have 64 GB and then the next storage level will have 512 gb. They know how to squeeze their consumers.

 

[subjonas]

I’m all for cheaper prices, but it’s so annoying when an article that has nothing to do with storage or price gets inundated with comments about storage price. It’s like people are just looking for any article even barely related to their qualm to serve as a platform to air their grievances. I wish at least there would be just one or two such comments and anyone who agrees would just “like” the comments rather than fill up the entire page of highest rated comments with differently worded versions of the same complaint (many times all rated by the other people making the same complaint).

Another over-encroaching ubiquitous complaint is macOS on iPad, but at least that complaint is about the product itself, therefore is of interest, and can be argued. Price complaints are the most boring of all complaints to me, because they say much more about the individual making the complaint than the product. And besides, price is the one thing we as consumers dictate the most directly with action because we vote with our dollar. If the product/configuration is popular and liked, then it validates the price. Then your qualm isn’t with Apple, but with fellow consumers or the free market system.

 

[AHDuke99]

I wish they'd include ProMotion on the Air, but I know if they did that, it would hurt iPP sales. That's the only thing I miss about my old iPP. Otherwise, the M1 is plenty powerful for a limited OS like iPadOS.

 

[boak]

At those iPad Pro prices for 128 GB, I will simply not buy.

That seems unrealistically high.

It’s a $100 increase from current prices. Apple may well pull an iPhone Pro strategy and raise the ASP by offering base storage of 256 GB at $999/$1199 as a compromise.

 

[Fuzzball84]

I really wonder if these will be as per the current design.... overall.. and so will just use the current magic keyboards for iPad...

The Magic Keyboard for iPad has to be one of my best Apple purchases in the past 3 or so years... but a real expensive one. You can't deny that its impressive build quality and design... so I hope if there is a new iPad Air... that it can maybe still be used with the new models.

 

[EugW]

It’s a $100 increase from current prices. Apple may well pull an iPhone Pro strategy and raise the ASP by offering base storage of 256 GB at $999/$1199 as a compromise.

No, it's still effectively a US$200 increase in base pricing.

I know OLED throws a wrench into things, but they still need to maintain the customer base. If they sell the base model at $999, I'm out. With that price structure I'd just rather buy a standard iPad. I want OLED but I'm not paying US$999 to get it.

 

[boak]

No, it's still effectively a US$200 increase in base pricing.

I know OLED throws a wrench into things, but they still need to maintain the customer base. If they sell the base model at $999, I'm out. With that price structure I'd just rather buy a standard iPad. I want OLED but I'm not paying US$999 to get it.

Best case scenario is $899 since the 11-inch already missed the last price hike and this would only be possible if Apple leaves the price of the 12.9-inch untouched for a $200 difference between screen sizes, which is unlikely.

 

[ThatsMeRight]

At those iPad Pro prices for 128 GB, I will simply not buy.

That seems unrealistically high.

Is it, though? Apple has already tested the waters in Europe with the current-gen iPad Pro and iPad Air.

The current 11" iPad Pro starts at $1160 in Europe. Since release in 2022.
The current 11" iPad Air starts at $860 in Europe. Since release in 2022.

Apparently, sales haven't plummeted and these prices have worked just fine for Apple in Europe. Surely, people in the biggest economy in the world (USA) can absorb a price increase in a similar matter.

 

[EugW]

Is it, though? Apple has already tested the waters in Europe with the current-gen iPad Pro and iPad Air.

The current 11" iPad Pro starts at $1160 in Europe. Since release in 2022.
The current 11" iPad Air starts at $860 in Europe. Since release in 2022.

Apparently, sales haven't plummeted and these prices have worked just fine for Apple in Europe. Surely, people in the biggest economy in the world (USA) can absorb a price increase in a similar matter.

No, tons of stuff in those countries had increased in price due to exchange rates. What Apple didn't do is decrease prices in Europe after currency exchange, even though some other companies did to ease the blow. I suspect Apple's manufacturing contracts are mostly in USD.

Furthermore $899 / $1099 already represents a price increase over existing US prices.

 

[Fuzzball84]

No, it's still effectively a US$200 increase in base pricing.

I know OLED throws a wrench into things, but they still need to maintain the customer base. If they sell the base model at $999, I'm out. With that price structure I'd just rather buy a standard iPad. I want OLED but I'm not paying US$999 to get it.

I know it won't happen... but I wish Apple tiered the iPad in a different way.. where display and sound.. the two most critical input output aspects of the iPad were consistent across the range.. and then differentiating the different tiers through processing power, and other features that are pertinent to each level.

At the moment... if you want a tablet with the best possible screen for watching movies and reading eBooks... you have to go all the way to the Pro for it, even if you don't need the other features it offers. But then its too big...

Apple used to focus on making a single device.. and making it the best.

 

[ThatsMeRight]

No, tons of stuff in those countries had increased in price due to exchange rates. What Apple didn't do is decrease prices after currency exchange.

Yes, there was a small period with a less favourable exchange rate, that's correct. That doesn't invalidate my statement: this is what the prices have been since 2022. During 90% of this time period, the exchange rate was 'normal', yet prices have remained at this high level. Brings me back to my statement: Apple now has real life numbers on what for an impact a higher price for iPad has on sales. Sales in the EU region continued to follow the same patterns as in the USA. It isn't unlikely that Apple may think: if Europeans can absorb this price increase, Americans can absorb higher prices just as well.

 

[EugW]

Yes, there was a small period with a less favourable exchange rate, that's correct. That doesn't invalidate my statement: this is what the prices have been since 2022. During 90% of this time period, the exchange rate was 'normal', yet prices have remained at this high level. Brings me back to my statement: Apple now has real life numbers on what for an impact a higher price for iPad has on sales. Sales in the EU region continued to follow the same patterns as in the USA. It isn't unlikely that Apple may think: if Europeans can absorb this price increase, Americans can absorb higher prices just as well.

The Euro is still down vs the USD about 13% compared to December 2020 values, and US pricing does not include VAT. Is pricing after VAT is removed still somewhat higher in Europe than in the US? Yes, but that's the way it's always been.

It's always possible though that US price increases with the OLED Pro models might be larger than European price increases. Apple likes to hedge its bets a bit with currency exchange, but given that the Euro hasn't fluctuated as much recently, it might be reasonable to adjust accordingly somewhat.