Goldman Sachs thinks Apple's Ipad needs a price cut

GOLDMAN SACHS analyst Bill Shope has reported that demand for Apple's Ipad is falling.

Shope's report on Apple's shiny Ipad said "it is prudent to assume the Ipad is facing some near-term demand challenges", referring to the upcoming holiday season. According to Shope's report Apple could do three things to keep Ipad demand up - adoption of Icloud, launching Siri on the Ipad and cutting prices.

In Shope's report he drew parallels with the Iphone and Ipod, claiming that Apple reduced the prices of the devices as it released new models. In particular he highlighted the fact that "the launch of the Ipad 2 saw no increase in storage capacity across the SKUs and no price change".

Shope puts forward the notion of Apple having an 8GB Ipad 2 priced less than $400 (£250). Such a move would, according to Shope, "further limit the competitive prospects of Android tablet vendors in 2012 and attract more cost-sensitive consumers amid the currently depressed macroeconomic environment." He added, "This could also further accelerate Apple's already impressive momentum in emerging regions such as China."

We here at The INQUIRER might not have a Goldman Sach's salary to back up our view but it is pretty obvious that a price cut would send Ipad sales through the roof. After all, even a mediocre, dead-end tablet such as HP's Touchpad flew off the shelves when it was priced to clear.

Although it is unlikely that Apple would ever price the Ipad as low as the Touchpad, if it does follow Shope's advice and either produce a low-end model or price an older Ipad somewhere between £220 ($350) and £250 ($400), Android tablet makers will have to seriously think about their pricing if they want to flog any devices.

Shope did not alter his forecast for Iphone and Ipad sales despite his comments. His point about Ipad demand waning at current prices might be encouragement for Apple to move the Ipad beyond the early adopter stage and cater for a mainstream, sensible audience that does not want to spend £400 for a tablet, no matter how shiny it might be. µ