How many $399 iPad2 did Apple sell?

I showed you the way to do the math here.

Apple released its earnings today and we can do the math with their numbers to find how many $399 iPad2 they sold. Bear in mind that the new price was announced near the end of the quarter.

Last quarter:

Number if iPads sold = 15.434 Million
Revenue from iPad =      $9,153 Million  (treating revenue from accessories as negligible)
Average selling price of iPad = $593  <– we will use this number of new iPad

Current quarter:

Number of iPads sold = number of $399 iPad + new iPads = n1 + n2 = 11.798 Million
Revenue from iPad = $6590 Million
That is,   n1 X 399 + n2 X 593  = 6590

The number of $399  iPad2s work out to 2.09 millions. That is 17.7% of iPads sold this quarter were the lower priced versions.

That is a big number given that the lower price was effective only for a short period during this quarter. And its effect was felt in bringing down the ASP for iPad. The effect can get bigger in the next quarter.

A key takeaway is, lower priced iPad  may bring in new customers but is also attractive to those who would otherwise buy higher priced new iPad. This is basic second degree price discrimination at work.

When you introduce a second lower priced version of a product you always have to worry about its effect on the sales of the higher priced version. The sales are not all incremental.

Apple will likely rethink their rumored $299 7-inch iPad due to these reasons.

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