Apple Planning To Sacrifice Gross Margins To Save Tablet Business – Digitimes Research

Digitimes Research’s Jim Hsiao says its analysts believe Apple is planning to sacrifice its gross margins to save its tablet business, which has recently fallen into decline. They project that Apple’s entry into price competition will to impact sales of its competitors’ high-end tablets.

Hsiao noted that compared with the iPad Air’s significant upgrades in 2013, the iPad Air 2’s hardware improvements are a lot smaller (some of us would dispute that evaluation), while the iPad mini 3, except for the addition of Touch ID functions and a gold color option, has almost no changes in specifications or industrial design.

Ergo: Apple’s pricing strategy for iPads has become more aggressive, and Digitimes Research expects the iPad mini product line, which was the biggest casualty of the iPhone 6 series launch, is expected to see some recovery in 2014 because of the iPad mini 2’s significant price cut and the price comparison effect to the iPad mini 3. Indeed, it can be reasonably argued that the current iPad mini 2 at $300 for the exact same spec. as the new (sort of) iPad mini 3 save for the two exceptions above-noted, is the biggest bargain Apple has ever offered in a tablet.

However, with demand for tablets in general expected to stay weak in the second half of the year, and demand for the iPhone 6 Plus stronger than expected, Digitimes Research has reduced its iPad shipment forecast for 2014 to 64.95 million units.