U.S. retailers will mark down Apple's iPad with steep discounts this Black Friday, according to store circulars and a retail analyst.
Best Buy, which published deals for Black Friday -- the day after the Thanksgiving holiday in the U.S. -- on Tuesday, will discount all models of the just-released iPad Air 2 by $100 and cut prices of the smaller iPad Mini 3 by $75, dropping the entry-level configurations to $400 and $325, respectively.
The electronics chain will also sell last year's iPad Air, but will not reveal prices until Nov. 20, a week before sales start.
Meanwhile, Target's specials will include a $140 store gift card with the purchase of a 16GB iPad Air 2 (which lists for $499), a $100 card with a 16GB iPad Mini 3 or iPad Air ($399 each), and an $80 card with a 16GB non-Retina iPad Mini ($249).
With the included gift cards -- which can only be used for other purchases at Target -- the effective price of the iPad Air 2 will be $359, those of the iPad Mini 3 or iPad Air $299 each, and that of 2012's original iPad Mini just $169.
Stephen Baker, an analyst with the NPD Group, expects Walmart to undercut even Target's prices. "I am betting that Walmart does a $149 or lower [first-generation] Mini and a $279 first-generation Air," Baker said in an email yesterday.
On Wednesday, Walmart didn't dive as deep into discounts as Baker had bet. The giant retailer revealed its Black Friday deals today: a 2013 16GB iPad Air for $397 along with a $100 store gift card (effective price $297), and a 2012-era non-Retina 16GB iPad Mini for $199 with a $30 gift card (effective price $169).
The discounts didn't surprise Baker, who last month pointed out that the iPad struggled throughout 2014 in the U.S., with retail unit sales down 16% in the year's first 40 weeks when compared to the year before.
In order to keep sales going -- and to use the iPad as a draw to get customers into stores -- retailers cut prices during the back-to-school season, turning the overall 16% downturn into a 3% year-over-year unit sales increase during that important selling stretch.
The unit sales growth came at a price, however, a literal one. According to NPD's data, the 3% uptick in iPads sold during back-to-school resulted in 10% less revenue when compared to 2013's similar season.
"The volume pressures will be enormous," Baker predicted in an Oct. 20 blog, of the need to move tablets, iPads included, by cutting prices in the final quarter.
After Apple launched the new iPad Air 2 and iPad Mini 3 last month, Baker forecast that the Cupertino, Calif. company's list prices for its earlier-generation models would not be maintained at retail.
"The iPad Mini pricing at $249 will not hold," Bakers said. "Three times this year major U.S. retailers have advertised it at $199. Those three weeks alone accounted for almost 20% of all iPad Mini sales in 2014, both regular and Retina displays, and were, by far, the three highest-selling weeks for iPads year-to-date."
Nor would prices of the more expensive 9.7-in. iPad Air stand, Baker said. "The iPad Air -- last year's model -- will not hold its price at $399 either; large tablets are even more competitive today than small ones," he wrote.
Those pressures, Baker said, were one reason why Apple extended the iPad line's price bands by retaining the two-year old original iPad Mini. For all its premium positioning, Apple isn't immune to the troubles facing tablet makers in the U.S.
"Aggressive pricing at the entry-level is a must for Apple," Baker said.