Apple's (AAPL) Unigue iPad Pricing Advantage

While Apple (NASDAQ:AAPL) competitors in the past have been able to compete on the price factor across products offered by the company, in the case of its iPad, they have turned that around, and now are not only competing with their strong brand, but at prices far below what their competitors are able to offer for their tablets.

Sanford Bernstein analyst Toni Sacconaghi said today there are four reasons for this.

The lack of a “price umbrella,” advantage on component costs, structural distribution advantage (sells through own stores), and Apple’s custom “A4″ processor.

Sacconaghi concluded, "We believe that Apple’s aggressive pricing for the iPad is consistent with (1) the increasing returns nature of the tablet market; (2) Apple’s view that the tablet market will be “huge” and “bigger than the PC market” and will attract competition from smartphone and PC vendors alike; and (3) the company’s desire to fully capitalize on Tim Cook’s assertion that the iPhone is the “mother of all halos”. We note that aspiring tablet competitors are further thwarted currently by reported shortages in key components including touch panels, which makes it harder to bring a product to market, let alone at competitive prices."

He maintains an "Overweight" rating on Apple, which was trading at $351.78, up $2.47, or 0.71 percent, as of 1:12 PM EST.