When the iPad was first released, it came with the tagline ‘A magical and revolutionary product at an unbelievable price’.  Apple wanted us to believe that $629 for the base model was low for a tablet device.  And many of us did.  However, with dozens of competitors releasing tablets at much lower prices (Pioneer’s DreamBook is currently available for $230) and a raft of fakes available for next to nothing, we should see scrutiny of iPad’s price point begin to increase.

But will it matter?  The launch and advertising buzz generated has succeeded in raising awareness, with 61% of the general Australian population aware of what the device is compared to 45% pre launch.  Fifteen percent of Aussies state they intend to purchase an iPad in the next six months.  Awareness and consequently purchase consideration of competitors in comparison is far, far lower.  We tested purchase consideration of Asus and Dell models – only 1% or less are considering investing in these in the near future.

Apple’s advertising campaign appears to be moving perception of the device in the right direction.  Criticisms of overlooked features and compatibility issues have died down in the media, and our recent Consumer Electronics Study points to the iPad carving out a future market for tablets beyond traditional Windows/Intel PCs.   Post launch (measured in June) versus pre launch (April), consumers were…

• Less likely to view their existing laptop as a reason not to purchase, 32% in April vs. 37% in June
• More likely to consider purchasing instead of a laptop, 9% in April vs. 6% in June
• More likely to state the device would be useful for consuming digital media while travelling, 25% in April vs. 19% in June
• Less likely not to buy due to incompatibility with Flash, 11% in April vs. 14% in June

What we’re seeing is the hype created by Apple, and the prestige associated with the brand, overriding more rational purchase drivers such as price and device capabilities.  Apple recently announced that sales of the iPad had hit 3 million in the first 80 days of release.  Alternatives such as the Dell Streak are making little impact.

The tablet form factor is still in its infancy; as it develops and more serious competitors emerge, iPad’s price point will come under greater scrutiny.  How do consumers feel about having to pay for a second data plan for their tablets?  Early indications are that it is not a concern with 3G models flying out the doors of retailers, maybe the excitement has made them overlook this.

So far, Apple’s impeccable timing together with the ‘Apple factor’ and huge hype has afforded the iPad an unopposed first cut at the tablet market.  The next 12 months will be interesting as serious competitors emerge with arguably better functionality (allowing users to actually create content), e.g. Android based devices or the PalmPad from HP.  Will the halo effect be enough to sustain iPad’s leadership?

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