Chapter 6 Blog- Apple’s iPad 2 Chalks up Strong Sales in Weekend Debut

Link:  http://online.wsj.com/article/SB10001424052748704027504576198832667732862.html

Summary:

On March 14, 2011, Apple Inc. released its new product, the iPad 2 to the public.  On the first 3 days since the release of iPad 2, there were about 400,000 to 600,000 units sold to the market.  Retail stores supporting Apple Inc. products such as Best Buy Inc., Target Corp., Wal-Mart stores, AT&T Inc., and Vernon Wireless, and Verizon Communications Inc. contributed in selling most of the iPad 2.  The new version of iPad is much thinner than the original one and it has a new feature containing a camera at the front and the back of the iPad for the purpose of video conferencing.  The price range for the iPad 2 is very similar to the original iPad, ranging between $499 and $829.  Apple’s products including the iPad 2 were manufactured by Samsung Electronics Co.  Some market watchers suggested that Apple should switch to another manufacturer company because a Korean company has high quality products like Apple which competes with Apple’s smartphones and tablet PCs.  An iPad 2 with 32 gigabytes cost Apple Inc. $270 where the original iPad only cost Apple Inc. $245.  Therefore Apple Inc. had to pay an extra $35 for each iPad.  Since the iPad 2 was only an improvement of the original iPad, analysts expected that the sales for iPad 2 won’t be really high.  However, their predictions were totally off by a huge margin.  Instead of decreasing sales, the sales doubled.  By the beginning of 2011, it is expected that Apple will have a total of 30 million units will be sold, which is double the amount of sales in 2010.  According to Apple’s previous quarterly results, the original iPad contributed to 17% of Apple’s sales which totaled to a final amount of $26.7 billion in revenue.

Connection:

This article relates to the factors of aggregate demand.  In this article, there was an increase in aggregate demand because there was a new product released.  .  New technology can change people’s preferences and tastes which usually receives a large response from consumers.  Since technology plays a significant role in our lives everyday, it is very popular and people will spend whatever amount in order to receive it.  For example in this article, it talks about the success of iPad 2.  iPads 2 are very expensive (ranging between $499 and $829) when it is first released and still there is a huge response from consumers.  People are fascinated by the amazing features provided by iPads and therefore people are willing to pay whatever price in order to obtain an iPad 2.  People had a good impression on the first iPad which built its reputation very high in the first place and now the new version of the iPad will be expected to be an improved version building up the features of an iPad.  With people encouraged to spend more, there is more money injected into economy.  Businesses will be more profitable and successful which means employees are able to retain their jobs.  The iPad 2 will keep on encouraging spending in our economy and as a result the GDP (Gross Domestic Product) will significantly increase, causing our economy to be more stable in the future.

Reflection:

Was the new release of iPad 2 a good impression on Canadian’s economy?  In my opinion I believe that iPad 2 was a significant product that can help Canada’s economy to continue to run efficiently.  Our economy was hit hard by the recent financial crisis in 2008.  Many people in Canada lost their jobs as a result and this affected their spending habits.  When an economy is in a depression, businesses generally have poor financial results and they lay many people off to lower the company’s expenses.  When the economy is in trouble, the best solution to fix the problem is to encourage spending so businesses will become more profitable and successful but however this is also the time when there is very little spending involved because people are unemployed.  Therefore I believe the factor that is able to stimulate people’s spending habits is the release of new products such as the iPad 2 in this article.  Apple’s iPad 2 encouraged people to spend more and it changed the spending habits of many people.  People disregard the price and only focused on getting an iPad at the end of the day before it was sold out.    Technological changes usually result in a positive feedback from consumers because technology is very popular and they play a significant role in our lives.  The economy in Canada is still recovering from the after shock of the recent financial crisis.  However new products are constantly being developed and I strongly believe that they are able to stimulate a person’s spending and cause the economy to start running efficiently again.