UAE retailers mull iPad price cuts to fight Apple store

Tech giant’s online store set to squeeze local retailers with lower price points
UAE retailers mull iPad price cuts to fight Apple store
By Elizabeth Broomhall
Sun 25 Sep 2011 10:40 AM

The price of
iPads and iPods in the UAE may be set to drop as electronics retailers mull
discounts in a bid to compete with Apple’s first online store for users in the
Gulf state.

Dubai firms
Jacky’s Electronics and Plug-Ins, whose profits have soared with the growth of
tablet technology, say the new online store will put pressure local outlets to
cut their rates.

“In the
short term, it’s for us to make a decision: either we [keep the iPad] at
current market prices or we bundle [it] with something else to add to the
offering,” said Ashish Panjabi, COO of Jacky’s Electronics. “That it is
something we will have to take a decision on. We are working with our suppliers
to see how we can improve the pricing.”

The pricing
of iPhones will not change, he said, as the handsets are sold under a du or
Etisalat-linked service plan.

US-based
technology giant Apple is pushing to improve its sales in fast-growing emerging
markets. Its virtual store offers iPad 2s from AED2,099 and iPhones from
AED1,899, alongside customised Apple products with individual specifications
for memory and drives.

Retailers
told Arabian Business earlier this month they had seen a surge in
revenues
on the back of strong sales of Apple’s iPad.

Jacky’s Electronics said sales of the tablet had accounted
for about 14 percent of all technology sales in the year-to-date, a figure
expected to rise to over 15 percent by the year-end.

Plug-Ins
said the company had seen a ten percent growth in sales compared with 2010,
with particularly strong revenues during the summer months.

 “I think would be hard to find anybody who is
happy about an online competitor kicking off,” said Omar Abushaban, general manager
of Plug-Ins. “They definitely have an advantage in that there are no overheads
so they can afford to drop prices. It is undercutting some of the retailers a
little bit.”

“For the
most part, retailers on a level playing field, but when you go online...
because there is no distributor in the middle, [you] can play with pricing a
little bit and bring it in line with the US and UK.”

The company
hasn’t ruled out lowering the cost of its Apple products in the future if it
struggles to maintain sales against the US firm’s cheaper online prices.

 “The UAE is a very price sensitive market but
there is a very low adoption rate in terms of online purchasing, so we’re not
sure how things are going to pan out,” he said.

“One
thing’s for sure, we’re going to continue to be competitive. That particular
part of the business, that brand and category is so crucial, I don’t think any
retailer can afford to be undercut.”

Apple, which has conquered the high end of the phone market
with its iPhone, saw its market capitalisation soar to $340bn in August on the
back of its innovative technology products.

The firm’s move to open a store may signal the Gulf market is
now on Apple’s radar, which could lead to the stabilization of prices for the
regional supply chain, said Panjabi.

“Apple has
traditionally neglected this part of the world, so it is good to see Apple
taking notice of the region,” he said. “We haven’t had the iTunes music store
available, we haven’t had a lot of the Apple services available in this region,
so I think it’s a welcome step that Apple is starting to take this [region]
more seriously.”

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