We can thank Apple for that.
Times sure have changed. Last year around this time when the iPad 2 was released, retailers were having a blast selling the tablet for about twice as much as it costs in the US. And I’m not just talking about those small booths at shopping malls that like to rip tourists off- some of the bigger power retailers were also as shameless about making a quick buck as these small time stores. This morning, I got an email from souq.com that is selling the base 16GB unit for AED 2,049 while the unit I purchased from US- 32GB with 4G is selling for AED 2,949. My credit card statement shows that I paid AED 3,032 for that same unit in the US.
Taking the example of the base 16GB unit I mentioned above for AED 2,049, that same 16GB iPad 2 was selling for as high as AED 5,300 last year. I can only imagine the rage that Steve Jobs would have exhibited when he would have found that out these resellers were making a bigger profit than Apple on each iPad that was sold. Apple needed to fix this problem as I’m sure many official distributors in regions such as ours must have raised their concerns and frustration. I remember iStyle had announced last year that it will not be providing service to grey-imported units of the iPad 2.
So what was causing the iPad 2 to fetch such a premium over it’s base price? Yes, it is a wonderful device but that was not the reason for it. It’s all about economics- supply and demand. While Apple must have estimated demand for the iPad for every official market that it was released into, it probably did not take into consideration the demand that would be created due to grey imports. The iPad is, after all, a very sought after item and in many parts of the world, people don’t want to wait to get one.
So Apple made sure it produced enough units of the new iPad to not only cater to all the official markets the new iPad was released into, but also enough so that the grey-importers don’t make a killing on it. As per Apple, they sold three million units of the new iPad in the first three days and while Apple didn’t release the sales figures for the iPad 2′s first few days of sales, it is estimated that it took Apple three weeks to reach that figure.
Thus, it’s no surprise that the new iPad is not fetching the premiums it’s predecessor commanded because Apple has nipped the problem that created the scenario for such premiums. Great news for consumers but not so much for retailers that forecast the hike of their profits around the launch of Apple products.