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September 01, 2011

Will tablets be sold like video game consoles ? Bundled loss leaders ?

Forbes - After more than a decade of battles with Sony and Nintendo, Microsoft sits atop the console business, where its entertainment and devices unit squeezed out operating income of just $32 million on $1.5 billion in sales for the quarter ending June 30. And that’s a success story.

Now analysts are betting Amazon will take the same approach, predicting the online retailer will sell a tablet computer for hundreds less than Apple’s iPad, making money by stuffing the tablets full of links to its music, video, software, and electronic book stores.

HP announced on one of its blogs that it will be building another run of the profit-sucking machines and selling them for $99. Presumably HP’s has already paid for the parts, so it might as well clear them out?



Apple doesn’t break out profit numbers for its iPad business, but Toni Sacconaghi at Bernstein Research estimates Apple’s profit margin on the $499 entry-level iPad is roughly 25%. Apple sold 9.3 million iPads during the quarter ending June 25.



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