Advertisement

Blog

Apple Can Be Beaten

I would have bought the TouchPad tablet PC from {complink 2376|Hewlett-Packard Co.} if I could have found one. At the clearance price of $99 for the 16GB model and $149.99 for the 32GB model, I would have swam the Pacific and taken on Hercules just to get my hands on the TouchPad — if I could have found one. Best Buy was sold out. There were too many people like me out there who wanted a really good deal.

How did we get to this bewildering situation? How did a product nobody wanted (at least, according to HP CEO Léo Apotheker, who pulled it from the market after only 49 days) become the hottest-selling consumer electronic device this last week? (See: Muddled Thinking Sinks HP.) Days after deciding to exit the tablet market and announcing a major acquisition, the TouchPad sold out in every store in the United States when the company slashed prices sharply.

Obviously, the TouchPad couldn't be that bad. Its sales lagged those of the iPad from {complink 379|Apple Inc.}, much like Research in Motion's Playbook and Motorola Mobility's Xoom. But enough customers wanted the TouchPad after the price cut that I became convinced it would have performed credibly against the best in the market.

Mr. Apotheker read the market wrong. It wasn't the performance that hurt the TouchPad. It was the price.

Matched against products from Apple, arguably now the world's most fascinating consumer electronics company, most devices today will perform poorly with customers. That's the current reality. To win, rivals must compete against Apple on design, user interface, and pricing. They must learn to accept lower gross profit margins, savagely slash operating costs, and seal sales on the price of their products.

It is not enough to have the most aesthetically pleasing product. Personally, I wouldn't have cared if the iPad had better looks, great graphics, a more awesome user interface, a faster processor, and ticklish curb appeal. I would have gladly settled for the TouchPad — if I had found one. I would have snapped it up with a credit card — even one with the teaser introductory rate that hikes up to 29.99 percent after a one-week introductory period. A debit card, even the pricey one Wells Fargo is testing (with the $3 monthly fee) would have come in handy.

I would have hauled the coin jar to my bank's sorting machine just to get my hands on a TouchPad. I might have rifled through my kid's room in search of the birthday cash he likes to squirrel away. I might have even searched the yard or the nearby community center for pennies if I was certain to get my hands on a TouchPad.

Demand for the TouchPad was so hot over the last couple of days that it froze sales of the iPad. Buyers thronged my neighborhood Best Buy and other retail outlets in search of the device. The successful ones came out with a wide grin, and those of us who emerged empty handed weren't happy at all. I would be a happier editor today — if I had been able to snag a TouchPad.

I didn't want a TouchPad until Apotheker announced he wasn't going to be making them anymore. Now I know I don't want the iPad, the Playbook, or the Xoom. I just want the TouchPad at the we-are-getting-rid-of-them price HP put on its tablet to clear out unwanted inventory.

Really, I would have bought one if the price were even about $200 less than the iPad's. Apple, it seems, can be beaten — at the right price point.

49 comments on “Apple Can Be Beaten

  1. Parser
    August 23, 2011
    I think Apple can be beaten if all other companies which compete with them would go out of business and had 70 percent sales. At that period of sales, Apple would encounter tremendous losses. After that, they will only be the only player on the market if they survived. Otherwise, this claim to beat Apple with obsolete product liquidations is unfair. No software updates, no bugs fixed, it becomes a child's toy.
  2. Hawk
    August 23, 2011

    Parser, you miss the big point here. Apple is only part of the issue; the strategy of the entire industry is under discussion here not Apple's invincibility. Yes, the company can be beaten. Definitely, folks are beating the bush now to figure out how and they will come up with the right formula. I believe the point of the article is clear and (in my opinion) it is this: Apple's rivals have to compete harder and must acknowledge its overwhelming headstart.

    It's pointless to simply roll out products that match Apple's and not be ready for a margin haircut. It's the only way they can begin to dent its armor. You can scrape off the Apple logo off an iPad, put Motorola Xoom on it and it will still not sell as well as the original, if you don't do something different — such as cut the price or whatever to clinch the sale.

  3. Parser
    August 23, 2011

    @Hawk, I see it quite differently. No one will beat the Apple using  coppycat products. Apple is selling true innovation and integration and to beat them one has to innovate and integrate and do it differently. Cost cutting on hardware will not do anything unless it is going out of business sale. 

  4. bolaji ojo
    August 23, 2011

    @Parser, I enjoy the discussion and appreciate your view. Humor me, though. If you were charged with coming up with a strategy to beat Apple, what would be the components of such a plan. (I know, we all wish we could come up with such a strategy. Just imagine the payoff.) Apple is certainly in a class by itself and I agree, I don't see anyone beating the company simply by slashing tablet prices. It has to be part of a broader plan. But back to my question: What will it take to beat Apple?

  5. Tim Votapka
    August 24, 2011

    It is hard to beat a standard, particularly across so many fronts. Apple's done a marvelous job of making itself too big to be attacked effectively; a proven tactic.

  6. Parser
    August 24, 2011

    Let me write it just only for humor.

    It would take the following ingredients:

    1.    Totally new and awesome Human Interface – entries and projections of data, settings and ease of use to be top priority, simplicity and functionality

    2.    Information device independent  

    3.    Integrated system with all business and entertainment needs satisfied under minimum number of clicks or gestures (including external devices e.g. HDTV)

    4.   Topnotch industrial styling

    It would be good to rely on Google’s hiring scheme — out of the box thinking, innovative approach and simplicity across software and hardware. Top management has to have very strong vision of the product overall integration, goals and its future evolution. Top management needs to constantly review competition and market trends and understand user feedback. Known improvements would have to be implemented in a very new way. 

    I could give more thought about, but here it is for fun only.

     

  7. Anna Young
    August 24, 2011

    @Hawk, you're right, it's possible for Apple to be beaten.How? Well until  an electronics high tech industry come forward with a unique strategy, that is  completely different from that of Apple's. Price slashing alone has not and will not affect Apple's leading position.

     

     

     

     

  8. Jay_Bond
    August 24, 2011

    I agree with your article completely. The problem everybody is facing is their pricing. When your products are the same price or more as the Ipad, most people would pick the Ipad. My wife and I were lucky to pick up a 32g Touchpad for $149 on Sunday. Had we not been out on the town being social Friday night and all of Saturday we would have snatched one up the minute price reductions hit.

    The funny thing is about a week to two weeks ago you could pick up a Touchpad for $250 using special offers and coupons. Peaked our interest, but the sale was for 1 day only. We were looking for another alternative to take with us while out of the house to take care of work emails and anything else that popped up without taking our laptop or using our Smartphone. The tablet was a perfect fit, just not for $500.

    If competitors were to reevaluate their pricing and what options they have, many can stay strong in sales and we don't need to see another large sell off.

     

  9. bolaji ojo
    August 24, 2011

    @Parser, Thanks for taking a shot at it. I agree with the strategy you outlined. We should expand on it.

  10. eemom
    August 24, 2011

    Price is indeed a huge factor.  I know a lot of people that would like to have the iPAD but don't make the decision to buy based on the huge $ investment.  I purchased an iPad early and I do love it but since I've bought it, versions are available through Verizon, and the iPad 2 came out.  The investment in the original iPad is too big for me to upgrade, at least for now.

    I wonder how the performance of the TouchPad compares against the iPad.  I understand that the price point is really attractive, however, if that price is sustainable and HP would have continued to manufacture the TouchPad, I wonder if it would have continued doing well against the iPad.  Consumer feedback would have to be favorable for the TouchPad to sustain huge sales and growth.

     

  11. Anna Young
    August 24, 2011

    @eemom & @Parser, Apparently, Bolaji isn't the only one who thinks price is going to be a factor in the battle for supremacy in the tablet market. Here's a quote from another article I read today:

    The main Google Android tablets, made by Samsung and Motorola, are pitched at around the same £400-ish price point as the iPad. But, put together with all the other Android tablets, it’s estimated they are outsold by Apple’s devices eight to one.

    Given Andoid makers’ weaker marketing, and, crucially, fewer apps, that ratio seems unlikely to change significantly. So the problem becomes circular: the user base is too small for app developers to invest in, so users buy an iPad because there are more apps and the user base gets even smaller relative to Apple’s.

    In part this phenomenon is Apple’s reward for getting to market first, but Android tablet makers must find a way of breaking the cycle to avoid the TouchPad’s fate.

    Click here for the full article. Nobody is saying competitors will win only on price but they must inject this into their planning.

  12. eemom
    August 24, 2011

    Maybe the answer is to make a lower end tablet?  A tablet with some basic capabilities that sells for a lot less than the iPad, doesn't directly compete with the iPad but can possibly take advantage of the market base that can't afford the iPad. 

    I have an Android phone and the app market there rivals the iPhone.  I wonder how difficult it is to tweak these apps for the tablets?  You are right though in that right now with the sales of the iPad taking over their competitors, developers know to invest their time with the iPad.  That is a shame though, from a consumer perspective, it would be really nice to have a competitive market out there.

     

  13. Kunmi
    August 24, 2011

    When the flat screen TV first came out, it was really expenssive; now you can get it for buy one get one free. Tablet is expensive and many people can not afford it but I strongly beilve that there is a technology out there that can be developed to mimic the tablet with the same capability and at a cheaper rate. That will surely come. It is just the matter of time

  14. Kunmi
    August 24, 2011

    Tvotapka , I do not believe that a standard is difficult to be beaten. The person that made the first shot may not as perfect as the person who will be making the second shot. There is no standard that will not have a room for improvement. That could be an advantage for any company that may want to challenge the current product.

  15. eemom
    August 24, 2011

    @Kunmi – that is very true, however, the reason the prices of Flat Screen TVs have come down so much is because their is ample competition in the market.  If you look at Apple's products however, the iPhone, iPod, iTouch, etc., they have kept a high price in the market over the years and demanded a premium because the technology is superior and there are no direct competitors that can perform what they can (with the possible exception of the Android phones).  Competition is key to price reduction…

  16. Houngbo_Hospice
    August 24, 2011

    We can just patiently wait to see Apple be beaten one day by Android? Everything is possible. It is true that Apple`s products are very expensive or even overpriced. But my feeling is that if Apple feels the need to cut prices to remain competitive, they can do so as well. They have enough cash to fight for long enough to drive any competitor out of business. But maybe not Google.

  17. AnalyzeThis
    August 24, 2011

    Yes, the Internet was certainly all abuzz with what a great deal the TouchPad was, but I passed. Why? Because by the end of the year I'll be able to get a better deal.

    Yes, the TouchPad was mostly discounted do to HP's larger company-wide issues, but the fact the tablet market is already flooded with too many products was the secondary factor: the demand for the TouchPad at its original price point just wasn't there.

    Fast forward a few months (keep in mind it's only August and holiday season is not yet upon us): there will be even more Android tablets coming onto the market, and not a whole lot of interested customers: it's essentially pointless to buy these products if the superior iPad is within the same ballpark.

    So the result will be a glut of unsold Android tablets. I'll be more interested in those because they'll have better app support. While I'm not going to be bold enough to predict that we'll see a discounted Android tablet at the $99 price point by the end of the year, I do feel quite confident predicting we'll see at least one reduced to $149-$199.

  18. jbond
    August 24, 2011

    While you are correct that future discounts will be coming due to the holiday season, it will be hard to find a deal like this unless somebody is closing shop. I believe it cost HP close to $350 to produce these, though I'm not positive with that number.

    The Touchpad is still a great piece of hardware. You've got a 1.2 Ghz dual processor plus 1Gb of memory. HP has announced they aren't completely getting rid of WebOS just yet, they will still offer support.

    There are also many techies that are in the process of porting over the Android system to the Touchpad. I know of one site that was promoting this (Touch-Droid.com). I'm sure many people will do this to now have an Android tablet to replace WebOs. The jury is still out on if we will do this to ours, though probably not since we don't think WebOs is that bad of a system. Plus with web access, who cares about how many apps, when you can surf the web just like your laptop.

    I'm sure prices will fall as competitors lose ground and sales, the only question will be whose the next to give up. 

     

  19. Clairvoyant
    August 24, 2011

    Great post, Bolaji. It indeed did show that there are ways to compete with Apple. There are probably a certain amount of consumers who were originally thinking of buying an iPad that were able to get the TouchPad at this low price. This has taken some sales away from Apple.

  20. AnalyzeThis
    August 24, 2011

    @jbond, you say that, “it will be hard to find a deal like this unless somebody is closing shop.” yet later on you say that, “ HP has announced they aren't completely getting rid of WebOS.”

    So it's not like HP is going out of business and you're STILL seeing a discount that steep. And yes, of course the TouchPad cost more than $99 to produce, but it's incredibly common to sell products for a loss when you're trying to clear out inventory or discontinuing a product, etc.

    So what is going to happen by the end of the year is that you'll have at least one of these other companies also throw in the towel and abandon their tablet plans: there are far too many companies making rather generic Android tablets out there as it is, and the problem will only get worse. At least one company will realize their jump into the crowded tablet market was unwise and exit it completely, closing out their remaining inventory in the process.

    Plus, as I said, I wasn't predicting another $99 tablet… I was just saying something in the $149-$199. And for an Android tablet with far more apps and mainstream support, I'd argue that'd be a far better value/deal than the rather limited app selection you'd get with the TouchPad.

  21. Nemos
    August 24, 2011

    can be beaten? Apple is in danger and it knows very well thats why took all the actions that it could take. Android is the worst nightmare for Apple, and as long the android is in most of the table devices the Apple is losing .

  22. mario8a
    August 25, 2011

    Apple in danger?   why ? the Quality of their products remain the same and maybe Steve left the company with some instructions to follow.

    I think is part of the nature of bussiness

  23. t.alex
    August 25, 2011

    Hmm, The price $99 can justify the cost of producing?

  24. elctrnx_lyf
    August 25, 2011

    I belive it can be beaten. But I always wonder what it takes to build a such commanding product in the market. Sony who is a leader in consumer electronics from decades is valued less than Apple. They have people, money but never were able to make huge impact like apple. But the apple with its distinguished products is always setting standards for others to follow ….

  25. Nemos
    August 25, 2011

    My previous comment has nothing to do with Steve and his resignation (more information here:

    why? Look at apple store. How much does it cost an application for download and compare it with the android market online store.

  26. Ms. Daisy
    August 25, 2011

    @mario8:

    I agree with your take on this topic. I also believe that Apple's change of leadership is one of the few well planned and calculated corporate transitions in recent times. Yes, Apple's distractors will play up the hype of drop in stock prices in hope of creating a little panic, but you are right, the products speak for themselves and Apple's management team is solid!

  27. Adeniji Kayode
    August 26, 2011

    @Hawk, you really made a good point and i quite agree with you on that. Apple seems so strong and unbeatable but if other companies can do something different with more features for lesser price, I think they should be able to compete with Apple and until then Apple will continue to be on top of the list.

  28. Adeniji Kayode
    August 26, 2011

    @elctrnx You are right,its not about how many years a company has been in existence but how well they can study the market and their counterpart, look inward and produce something that will be of great use and ease people or a better and faster way of doing things.

    I think Apple is doing that alot and its helping them a great deal.

  29. Adeniji Kayode
    August 26, 2011

    @Hospice, you are right, I feel with time Apple will bring down the prices to remain on top, it just that for now other manufacturers are not giving Apple enough reason(s) to do that in terms of competition

  30. Himanshugupta
    August 27, 2011

    @Bolaji, i might have missed the point but if i know that i am getting a good product for half the price then my conscious will tell me to go and buy it. But if a product is introduced at half the price than that of a great product then i will take a step back and convince myself that the product is inferior. Right now Apple seems unbeatable because it is. They have great products and more importantly full confidence of the consumers. Price alone will not help companies in beating Apple and nor will the copy-cat products. I would advice companies to wait for the right time and try not to fall too far behind in product innovation.

  31. prabhakar_deosthali
    August 28, 2011

    This discussion about low cost product competing with Apple reminds me of a similar case with Sony. 

    In india Sony introduced their Sleek and high priced laptops with matching advertising to create an up-market product  image.

    But with recent reasonably priced laptops and notebooks availability from Dell, Lenovo, Acer and Toshiba has forced Sony to bring down their prices and offer low cost products.

    The giants have to bow to market pressures sometimes.

  32. Wale Bakare
    August 28, 2011

    t.alex,

    I dont think the price can justify the cost of production, i think the ridiculous $99 Touchpad price is give -away. If HP indeed promise to put more in market, i bet am hoping to snatch 2 pieces of Touchpad for $198. Apple's ipad sales might be hunted with this.

  33. t.alex
    August 28, 2011

    Wale, it is a crazy price. I would love to get a WebOS phone at such price as well.

  34. bolaji ojo
    August 28, 2011

    @Himanshugupta, I am not suggesting rivals try to beat Apple solely on product pricing. That's always a failing mechanism in a competitive market and such a plan will hurt all manufacturers, including Apple. What I propose is a total-point competitive strategy that involves matching/exceeding Apple on design aesthetics and functionality, ease-of-use and finally cost. Apple has a huge lead over rivals and any company that brings out a similar product and simply expects customers to purchase it because it “only” rivals Apple's will not be as successful.

  35. _hm
    August 28, 2011

    It is not beating Apple with price. Apple creates it own market with most innovative products. You can beat Apple only with innovation. Also, they also have one better model in their arm to protect themselves for this low price attack.

     

  36. Anna Young
    August 29, 2011

    @_hm, Let's look decades into the past. Apple has been beaten before and it will get upstaged again. Microsoft's Windows OS slapped Apple around once because of mis-steps at the company. It's unlikely the current status quo will persist because it's an unsustainable model. The rest of the field is crying and Apple is raking in profit. Eventually, rivals will figure out a winning model and wear Apple down. I give it five years. Don't forget, Apple has to be right against all opponents all the time but only a few opponents have to get it right to move past it.

  37. _hm
    August 29, 2011

    @Anna: At Apple innovators are not afraid of competetion. They are more interested in future and new innovation for customer. This way they do not spend time in futile work. Once ahead, you are always ahead. Innovation is the key for no 1 vendor in any field.

  38. electronics862
    August 30, 2011

    If you look at the last year apple's iphone4, it received a warm hand from customers due to its reception problem. And in this 14 months period there is no news from apple regarding next generation smartphone. In the next few months if somebody come up with a good quality smartpone there is definently a chance to beat apple.

  39. Ashu001
    August 31, 2011

    Bolaji,

    This is makes total sense here.

    Beating the competition only on Price is a foolproof way to going out of Business.Good to avoid going in that direction.

    Regards

    Ashish.

  40. Ashu001
    August 31, 2011

    Wale,

    I agree too.

    Maybe if HP announced that looking at Popular response we are going to bring the HP Touchpad back into a short production run and price it at about $150,it wil definitely be a sucess and succeed in elminating a large part of Apple's market share.

    Regards

    Ashish.

  41. Ms. Daisy
    August 31, 2011

    electronics862:

    Do you believe we need more smartphones?

  42. Adeniji Kayode
    September 9, 2011

    @Bolaji, Hmm, You are right on that. i expect other maufacturers to really study what is causing wave in the market before producing any device to match or compete with what is already in the market. Like you rightly said, not only slashing the price can intimidate Apple right now but coming out with a device that offers more comfortabilities and functions then at are less price

  43. itguyphil
    September 9, 2011

    Adeniji,

    I think that is the magic potion but it is A LOT easier said than done. Along with a great product, you have t market it to the audience in the right manner. That is what Apple excelled at. I think that is even more difficult than making a device feel right, it's making user WANT to have it.

  44. Ariella
    September 9, 2011

    @Anna, I agree. No company is immune to the possibilty of being beaten. You said it very well: “Don't forget, Apple has to be right against all opponents all the time but only a few opponents have to get it right to move past it.”

  45. maou_villaflores
    September 27, 2011

    Apple can be beaten in terms of prices but when it comes to technology and over all product value well competitors have a long way to run.

  46. electronics862
    September 28, 2011

     If Android can continue to sweep round the consumers who don’t want or simply can’t afford an iPhone or iPad then Google are surely onto a winner..

  47. hwong
    September 30, 2011

    Iphone totally revolutionized smart phone to be software driven. Price wise, it's just a bit more than competitors' stuff, resale value wise, it's way higher than the rest. Don't forget many people see Apple's gadgets not some kind of commodities. It's like Ferrari or Louis Vuitton, simply worshipped by many who admire it.

  48. Damilare
    November 29, 2011

    i agree with you, but with a good price, functions and quality of product can offer alot more competitive advantage for a manufacturer. A good example is what the likes of samsung and motorola tablets is offering.

  49. Ashu001
    December 7, 2011

    Damilare,

    You raise vital points here. However the way I look at it-This is the Only way a company can compete in the electronics space today.

    Even if you consider the case of Apple-Sure they most definitely have the Fanboys who will lap up every single product that the Cupertino company will come out with but only upto a certain amount of time.

    If their products really were no good,the Sales would'nt Double Digit Sales growth evry single year.After all,no matter how much a Fan of Apple one is,are you (or your family going to let you) buy the same product again and again(especially if your old product is still in excellent condition).

    AS far as Apple goes,I would really appreciate if Apple comes out with either a Recycling program(for all Apple products as part of the product price) or had a great Exchange offer[Where you can exchange your old Apple product for a new one and get a significant discount on your new Apple product].

    Regards

    Ashish.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.