Apple (relatively) recently introduced different “versions” of the iPhone and iPad—in particular, currently Apple sells four versions of the iPad (iPad Air, iPad with Retina display, iPad mini with Retina display, and the iPad mini）–http://www.apple.com/ipad/compare/. Note that the “top of the line” iPad and iPad mini are available with hard drives that range from 16GB to 128GB, and with the A7 chip. The other versions of the iPad and iPad mini are only available with a 16GB hard drive and feature slower chips (A6X and A5), but at a lower price than the top of the line models.
Main Topic: Indirect price discrimination and cannibalization
Base on the main topic, critical analyze the questions below:
a. Briefly explain why continuing to sell the older models when the newer generation’s models are introduced is an example of price discrimination. How does this Apple reach a larger market?
b. Why are the lower tier models are currently only available with the 16GB hard drive, when previously (when they were the top of the line models) they were available with larger hard drives?
c. When the iPad mini was first introduced, industry experts estimated that for every 4 million iPad minis that were sold, sales of the full-sized iPad would decrease by 1 million units. Assuming that is the case, explain why introducing the iPad mini was a good idea, even with some level of cannibalization.
