As Apple iPad Comes To Market Competitors Eye Price Cuts

E-reader marketers like Amazon (AMZN) and Barnes & Noble (BKS) have caught a break just before Apple comes to market with its iPad table computer. The iPad, with its 10.1″ screen, touchpad operation, and powerful processor is widely seen as an alternative to e-readers, particularly the successful Amazon Kindle.

The chip at the core of most e-readers is manufacturered by Freescale, and the processor company has announced a new product that improves the capacity of an e-reader to run applications and operate more quickly. And, the chip is $30 less expensive than the previous generation of processors.

Freescale says that its new product will allow e-reader prices to drop below $200. The lowest priced iPad will retail for $499 and will not have 3G mobile broadband capacity. The 3G model price begins at $629.

Apple is not used to having to compete on price. It Macs are aimed at the very high-end of the personal computer market because most of them retail for more than $1,000. The iPhone carries a higher price point than most smartphones. Part of the reason for Apple’s pricing power is its brand. Another is the leverage Apple has because of the perception that its consumer electronics are better designed and more fully featured than the competition.

But, Apple’s advantage in the tablet computer and e-reader market may be eroded before its gets it first machine into stores. The iPad’s chances of being a runaway success may be blocked by the better technology that its competitors just got access to.

Douglas A. McIntyre