Is Apple Pricing Aggressively to Dominate the Tablet Market?

With Lenovo's LePad tablet now on sale in China, the tablet-war watchers add another piece to the pricing puzzle. But this one may make them ask whether Apple (Nasdaq: AAPL), known for its ability to command premium prices, is using a different strategy for its iPad tablets.  

It's not that Apple didn’t tell anyone
On Apple's earnings call last October, CEO Steve Jobs stated: "We're all about making the best products at aggressive prices, and that's what we will do. That's what we've done with the iPod and that's what we will do with the iPad as well." It should have been hard to miss that comment about aggressive prices: It's out of character for Apple, and Jobs was responding to analyst concerns about a sequential drop in gross margin that quarter, from 39.1% to 36.9%. 

Of course, last October there weren't iPad competitors that could we could use for comparison-shopping. Now there are.

Lenovo's LePad is one of them, and it's priced above the most comparable Apple iPad 2. The LePad is priced in yuan, and the price points are clearly chosen to end with the ever popular "99."

Sources: Apple.com, BestBuy.com, PCworld.com, WSJ.com.

Motorola Mobility was ridiculed for pricing its Xoom above the most comparable iPad. Notably, pricing on Motorola's Wi-Fi-only version subsequently came in at the same price as the most comparable iPad.

HP has not yet announced pricing on its upcoming TouchPad tablet, due out this summer. According to news articles, a leaked document indicates that HP plans to match iPad 2 pricing, including an entry-level model at $499.

Although Samsung, Dell (Nasdaq: DELL) and Research In Motion (Nasdaq: RIMM) offer lower-priced tablets, their screen sizes are 7 inches instead of roughly 10. In tablets, size matters.    

*Available on April 19 in the United States and Canada.

Foolish takeaway
We'll get more data points when Lenovo's LePad goes on sale outside China in June and when HP officially announces TouchPad pricing.

In the meantime, Steve Jobs' comments about aggressive pricing on the iPad, combined with competitors' apparent inability to undercut iPad pricing, suggest that Apple may be using aggressive prices to dominate the tablet market in the same way its iPods dominate the MP3 market. If it succeeds, the strategy could drive stellar earnings growth at Apple for many years to come. 

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