The Breakdown

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New iPad reveals Apple's customers-last sales strategy

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Just in case you've spent the last 24 hours sleeping under an old iBook G4, the NEW Apple iPad hit Apple Stores today. One man reportedly waited in line for week, presumably to pick up the 4G-enabled 64GB tablet with the awesome retina display screen (price: $829).

Classic Apple, in the Greatest Company on Earth Era. The entry level iPad 2 (WiFi only) even went on sale for $399. But unless you're a completely blinkered Apple devotee, you have to ask yourself why Apple waited until now to launch what we're not supposed to call the iPad 2S or the iPad 3, because Apple wants us to henceforth refer to the iPad only as an iPad, better to avoid the generation-creep that plagues the iPhone, version 5 of which is expected to arrive this summer. 

The iPad, old and wizened as the device is since its appearance in 2010, traditionally sees a new model in March. This provides Apple with a nine-month period in which to sell the device, capping what has up to this point been a veritable frenzy with the holiday season. It then holds on for a year and squeezes every last sale is can out of the current generation of the device before pulling the trigger on the upgrade following holiday season number two.

Of course, if you bought an iPad 2 last year, you paid full price. A mere three months later, the base model and the 3G version have been discounted — the base model by a substantial $100. 

You are, in other words, a bit of a sucker. Apple extracted, at the upper end, an additional hundred bucks based on sheer impatience. Of course, you probably knew that the price would drop on the old version. And it didn't matter. This why Apple's greatest innovations are now happening at the level of retailing and crushing the profit margins of its Asian suppliers while keeping its own sky-high. It's also extracting additional profits for wirless carriers, like Verizon and AT&T, who have to sell iPhones at a discount.

The reward is that, based on fourth quarter sales for 2011, Apple has seen its stock price rise by $280 since December 30. 

You can't begrudge Apple this sales strategy — it's obviously very successful, because even though it seems to pull sales forward, and books them at a higher level, it appears that just as many people are available to support boffo sales of the new version of the iPad when it comes out. Apple can't lose. 

But customers can. You can see this more vividly with the iPad than with the iPhone, which also keeps customers on an every-two-years treadmill. However, the situation is more fluid in the smartphone world, and besides, iPads are seen as more of a holiday purchase, whereas iPhones — more a necessity — get bought at a steady clip throughout the year. People save up for an iPad, which is at this point, being a tablet, still a "third" screen, behind the iPhone and the MacBook (I'm keeping it all in the Apple family here).

If you're an Apple customer and you're OK with this, great. But you should be aware of how Apple uses product launches and selling strategies to gobble up as much of your money as it can, when it can.

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