UAE retailers mull iPad price cuts to fight Apple store
Retailers looking at options to compete with new Apple online store
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 on 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 ($571) and iPhones from AED1,899 ($517), 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% of all technology sales in the year-to-date, a figure expected to rise to over 15% 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."