More On Apple’s Retail Dominance Strategy for the iPad

Yesterday I wrote a post titled “How Apple Is Positioning the iPad to Slaughter the Competition” and in that post I stated:

Even if Apple convinces 10% of people to buy an iPad instead of that cheaper net book or soon Android tablet, then this model will be a huge success. Just look at how many iPads have been sold without all this retail presence – until now people have had to go out and actively seek to get an iPad. Come November the iPad will just be every where for you, just like Apple did with the iPod.

Which was more or less my thesis of the entire post, you just had to read until the end (sorry about that). The post got picked up a few places and was well read. I thought I might take a moment though to clarify and expand on a couple of things.

The (lack of) Competitors

It was mentioned in a couple of places that right now the iPad really does not have any competitors. I could not agree with that sentiment more, however there are always competitors. Really the iPad is competing with any consumer good in the $300-1000 price range – the iPad like all goods is competing for your (our) disposable income. I set the price range as low as $300 deliberately, the thinking here is that if you are saving up to buy an iPad, once you have saved $300 you may be tempted to buy another good in that price range that you have been desiring. The psychological satisfaction of getting something now for your $300 instead of having to wait another period to reach $500 for the iPad is quite a driving force in the consumer mind.

Thus it is safe to assume that someone wanting to buy an iPad that has already saved $300 of the needed $500 will be quite tempted by any like good for the instant gratification that may bring (e.g. Wii, Playstation, BlueRay Player [can you still buy those?], Net Book, Smart Phone, etc.). So you can begin to see here that the iPad really is not just competing against other tablets or computers, but really the iPad is competing against anything else that you might want to buy – which is a lot of things.

That is why I believe it is so critical and so very smart of Apple to get the iPad in as many places as possible. The iPad sitting on the shelf near something else you want will serve as a constant reminder that if you can just wait a bit longer you will be able to get the iPad instead of that gas powered blender.

So in this case the iPad will serve as am reminder that it is the good you want to buy over all the other goods on the shelf. Now as I originally stated this is not going to get everyone to wait and buy an iPad, or even choose the iPad over other products. What this does do though is makes a strong case for waiting or purchasing the iPad instead of something else.

Risk

It was mentioned in a few comments that I saw around the web that this is not a risk at all for Apple given the massive amount of cash that they are sitting on. Frankly I don’t know where people got this from, not once did I talk about the risk of doing this from Apple’s perspective. In fact in thinking about it now it is far more risky for Apple not to pursue this route. If Apple just told people to come to the Apple Store (online or retail) they would be limiting their market size right away.

Steve Jobs knows this:

The Mac-user interface was a 10-year monopoly, Who ended up running the company? Sales guys. At the critical juncture in the late ’80s, when they should have gone for market share, they went for profits. They made obscene profits for several years. And their products became mediocre. And then their monopoly ended with Windows 95. They behaved like a monopoly, and it came back to bite them, which always happens.

The risk that Apple is facing is not getting the market share now before direct tablet competitors come to market. This risk has nothing to do with the potential of the device being sold at ‘other’ stores and everything to do with the device not being in front of enough consumers faces. Apple wants everyone to have seen and touched an iPad so that when Android/Windows tablets come to the market people have something to directly compare them to, and that something is the iPad.

Originally posted for members on: October 15, 2010
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