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Thursday, April 4, 2013

With Price Cuts, Retailers Anticipate New iPad

Apple has been pumping out new versions of its flagship devices for so long now that it’s a question of which month, not whether, it will introduce new iPads and iPhones.

The electronics retailer Best Buy on Wednesday took its best guess that the latest iPads are coming soon from Apple by slashing prices on one line of the Apple tablets by 30 percent.

The price cut applies only to third-generation versions of the devices, not the latest vintage, otherwise known as fourth generation iPads. Best Buy is now selling the least expensive third-generation iPad, with 16 gigabytes of storage, for $314.99, down from its previous price of $449.99. A third-generation iPad with 64 gigabytes of storage and support for LTE cellular networks now sells for $545.99, down from $779.99.

Jonathan Sandler, a Best Buy spokesman, said the steep price cuts are not unusual, “especially when looking ahead to potential new product launches by our vendors.” Mr. Sandler stressed that Best Buy has no privileged insight into when Apple might introduce new iPads, beyond the seasonal product introductions most people expect from the company.

The third-generation iPad is a bit of an oddity so it’s not surprising to see a retailer try to clear out its inventory of the devices. Apple introduced the product in March of last year and then, in an unusual move, released a fourth-generation iPad in the fall. The newer version has Apple’s new lightning connector and a faster processor, raising the question of why any customer would bother buying a third-generation device without a significantly lower price.

Walmart, meanwhile, has begun offering a more modest discount on iPad minis. Normally selling it for $329, the retailer is now offering the device for $299.

The iPad is facing a lot of tough competition from the likes of Amazon, Samsung, Google and Microsoft and has been losing share. But some analysts believe the company enjoys advantages over rivals that will give it a significantly bigger position in the years to come than it has in smartphones, where the iPhone accounts for a bit over 20 percent of worldwide shipments.

In a research note published on Wednesday, Toni Sacconaghi, an analyst at Bernstein Research, estimated that Apple will account for 40 percent of the worldwide tablet market in its next fiscal year, down from 57 percent during its last fiscal year. Mr. Sacconaghi thinks Apple will sustain higher market share in tablets than in smartphones in part because it has been more aggressive in courting more price sensitive consumers with the iPad mini, the iPad has better global distribution than the iPhone and there are more apps optimized for the iPad than there are for competing tablets.