Analysts See iPad Price Drop, with Some Cannibalization

Just weeks before Apple officially rolls out the iPad, financial analysts are making pricing predictions. But could the analysis itself hinder the initial demand for the pricey tablet computer?

The much-anticipated iPad is priced at $499 for the 16GB model, $599 for the 32GB model, and $699 for the 64GB model -- all available in March. The 3G models won't be available until April and will sell for $629 for the 16GB model, $729 for the 32GB model and $829 for the 64GB model.

Credit Suisse analysts said Apple will stay "nimble" with its pricing strategy and may even discount the devices if customers aren't buying. Rob Enderle, principal analyst at the Enderle Group, sees irony in the reports: The comments could actually cause the result.

The Pricing Graveyard

"We certainly saw people rush out initially and buy the iPhone. When the demand dropped off after the first couple of weeks, Apple dropped the price sharply," Enderle said. "Of course, the iPhone over time has gone from about $600 to around $200, which is a fairly substantial drop in price."

Enderle predicts the iPad will go through a similar price drop, but adds that the coverage of Apple's willingness to stay nimble may actually slow initial sales -- especially among consumers who feel burned by buying the first iPhone too quickly.

"The $600 price range has been a graveyard for products, starting with the original iPod, which had to drop its price point very rapidly, all the way to the Sony PS3, which also died at that price point," Enderle said. "I expect they will drop out of that price area fairly quickly."

The Cannibalization Question

Will the iPad cannibalize Apple's other product lines? In a publicized note, Credit Suisse analyst Bill Shope indicated cannibalization is not as large a concern as some may believe because there is...

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