Economic analysis

Wishful thinking?

Dell’s global head of marketing, Andy Lark, has become the subject of Internet ridicule after he trash talked the iPad— the very same device people are lining up around the block to buy. In a recent interview, Lark suggested Apple’s approach would ultimately fail when it comes to business customers because the iPad runs on a closed OS and is too expensive. “Apple is great if you’ve got a lot of money and live on an island. It’s not so great if you have to exist in a diverse, open, connected enterprise; simple things become quite complex,” Lark said. He went on to suggest the iPad’s price tag puts it out of reach for most people, particularly once you throw on a bunch of accessories like a peripheral keyboard, mouse and a fancy case. “An iPad with a keyboard, a mouse and a case [means] you’ll be at $1500 or $1600; that’s double of what you’re paying,” he said. “That’s not feasible.” (Not to be outdone, an HP executive also recently criticized Apple’s heavy-handed relationship with partner companies, calling it potential weakness).

Blogs were quick to provide Lark with a reality check. “Okay, timeout,” said BGR. “[US]$1,600 for an iPad, case, keyboard, and mouse? Let’s do some quick math: 64GB 3G iPad 2 $829, ridiculously expensive leather Smart Cover $69, Apple Bluetooth Keyboard $69, Apple iPad Dock $69 (not mentioned, but why not), Apple Mighty Mouse (which won’t work with an iPad, but we’re going with it) $69. That’s a grand total of $1,105, just $400 to $500 off Lark’s estimates.” Apple Insider drew a similar conclusion: “It is unlikely that a keyboard, mouse and case would cost the same as an iPad.”

Lark may have a point about potential demand for cheaper tablets, but Dell would be wise to focus on improving its own products (anybody have a Dell Streak?) instead of criticizing Apple’s. Apple has sold nearly 16 million iPads worldwide and currently commands three-quarters of the market. And some analysts are dramatically upping their forecasts following the success of the recent iPad 2 launch. A quick look at stock price performances over the past year tells the story: Apple’s shares are up nearly 50 per cent. Dell and HP? Down 3 per cent and 22 per cent respectively. Clearly Apple is doing something right.


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