Here’s what we found: While the price of these other technology-driven products and services has continued to fall over the last few years—personal computer prices have dropped over 44 percent in five years—the prices for wireline broadband have mostly been flat.

So why haven’t wireline broadband prices budged in recent years? The high, fixed costs of broadband means that there hasn’t been a big rise in competition among providers, according to Scott Wallsten, Vice President for Research and Senior Fellow at Technology Policy Institute. Indeed, most Americans don’t have more than two options when it comes to wireline broadband providers. (See how many your area has here. )

In the meantime, people who don’t have broadband want it badly and the for those who do have it, it’s become increasingly indispensable. The result is that there hasn’t been much downward pressure on prices.

The last few months did see a very slight drop  in the price of broadband. It’s unclear whether that’s just a temporary blip or beginning to use the high-speed wireless network LTE as a substitute for wireline broadband. (Of course, if it’s the latter and that trend continues, that could drive down the prices for broadband.) ”A big, and open, question is whether LTE will begin to compete on the margins with wireline broadband,” says Wallsten.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• U.S. Wireless Data Market: Q4 and Year-End 2008
• Tablet market to hit over 377 million units by 2016
• LTE changes everything; LTE changes nothing

During the course of the past year, Apple’s stock price has experienced 40 percent growth, based mostly on the strength of the iPad’s success in bolstering its already strong sales of iOS devices. Compared to the overall NASDAQ average growth of only 1.2 percent, Apple’s success is meteoric.

Andy Perkins, a Societe Generale analyst based in London, told CNNMoney.com that part of the reason behind Apple’s ballooning stock price is its ability to beat expectations consistently. “The anticipation was as they shipped more the price would lower,” said Perkins, talking about the iPad .”But the margins have kept much higher than people had anticipated.”

Apple does not pay dividends on its stock, despite some analysts urging them to do so, arguing that a payout could encourage growth. Cupertino stopped dividend payouts in 1995, when it decided to focus all of its revenue back into growth at a time when it was locked in heated competition with Microsoft.

Some argue it no longer needs to do that, and could spend some of its roughly $50 billion cash on-hand in dividends for investors, or in repurchasing shares. Others aren’t so sure, arguing instead that Apple should continue to hold on to its cash so it has plenty of room to innovate. A smaller cash pile would mean it could absorb less risk, meaning more ambitious projects might fall by the wayside.

So can Apple continue this level of success? Analysts, predicting strong fourth-quarter results, say yes. Bank of America (BofA), Merrill Lynch and Oppenheimer have all raised their price targets for Apple recently. BofA is now setting $400 as its target price, up from $360, while Oppenheimer’s has gone up to $345 from $330. One of the primary reasons for the new targets was that Apple itself has projected fourth-quarter revenue exceeding analyst expectations, despite being a company that normally embraces much more cautious estimates.

Related content from GigaOM Pro (sub req’d):

• Can Anyone Compete With the iPad?
• Got a Cable Subscription? There’ll Be an App for That
• How to Market Your iPhone App: A Developer’s Guide

The reality is different. Apple wouldn’t make any money if it just charged slightly higher than the manufacturing costs. Apple has to pay for both hardware and software development, plus the costs of launching a completely new product. It also has to pay its employees, both at the Apple retail stores and at Cupertino itself. With these extra costs in mind, the price of the iPad doesn’t seem as high (many Apple analysts were actually predicting that the iPad would cost $1,000 or more). Apple’s margins are actually far less than other commodities like CDs, which cost about $1 to manufacture, yet are sold for around $10 at retail.

Apple gets these margins for each version of the iPad:

As you can see, the margins stay about the same as the hardware costs go up. Apple’s margins for new products have historically been around these numbers as well, so if you are being gouged (and you’re really not), at least you should be used to it by now.

Shows already being offered at 99 cents are cited as examples of testing for this new scheme, but the shows in question aren’t exactly the most popular, so it seems almost as likely that the discounting is designed to stimulate sales in these specific cases. MTV’s “Wonder Showzen” and Warner’s “Children’s Hospital” are among those on offer at the reduced rate.

Still, we’ve heard rumblings of this before, and the article in the WSJ fits almost exactly the description of what an intentional leak from Apple looks like. Also, I have no doubt that while networks might not be that crazy about this idea, there’s no reason Apple wouldn’t want to see the price of standard definition TV shows cut in half (they currently cost $1.99 per episode).

There are plenty of reasons why they would want that to happen, though, and the biggest of all is iPad marketability. To people who, for example, think a ReadWriteWeb post is actually the Facebook login page, the iPad is a mysterious device indeed, with few sellable qualities. Why would such people pay for the ultimate web browsing experience, for example, when they’re terrified of the web? What they will pay for, and what they do understand, is TV.

Bestselling shows offered at a dollar isn’t only an attempt to woo iTunes TV-viewers to the new platform, although it will probably help do that. The advantage of such competitive pricing for a single, popular type of media is that it will make the iPad a destination device for said media, in the same way that the iPod has become the digital music player. Apps might sell the iPod touch and iPhone now, but make no mistake, what sold their predecessors and allowed them to even exist in the first place was music.

TV could do for the iPad what music did for the iPod, and Apple knows it. Sure, the iPad has apps, but I’d be willing to bet that apps still remain mostly untouched territory for a massive number of people who use the media playback capabilities of their iPods and iPhones. Books aren’t priced competitively enough, nor do they appeal to a wide enough market to create the kind of consumer rush Apple is looking for with its new device. No, it has to be TV, and for that to become a reality, consumers have to see prices that compete with or improve upon cable subscription models.

Offering cheaper TV is a step in the right direction, but there is an alternative if talks break down and Apple can’t offer steep discounts on its current TV prices, which by all accounts are fairly high. Apple should merely open the platform a little by either developing easy conversion options itself for .avi files and other formats, built right into iTunes, or by encouraging third-party companies to do so. In short, make it easier for users to get their own files onto the device, and you broaden the hardware’s appeal immensely.

Apple currently makes it somewhat difficult to get your own differently formatted media onto its devices because by doing so, it encourages content providers to offer their media for licensed use with the device. It gives Cupertino the ability to negotiate with those providers, since Apple is actually protecting their interests by discouraging piracy.

But if networks don’t begin to take Apple seriously as a contender to cable companies and other TV service providers by offering competitive prices, I say the Mac-maker is well within its right to go its own way and open the platform up. Consumers will reward them with big hardware spends to make up for lost media revenue.

Sometimes I have to wonder whether everyone has taken leave of their senses. The big “news” doing the rounds in the last twenty four hours is that Apple execs have admitted they are prepared to change the price of the iPad should consumer reception (read: sales) demand it.

Yeah, that’s right; Apple admitted it might revisit the price of the iPad sometime in the future, and change it according to sales performance. Shocking, that a company might operate according to a business plan designed to encourage sales and make money, eh? Apparently, that’s somehow mind-boggling news.

It got started because of a report by Matt Phillips of the Wall Street Journal, who wrote;

Apple intends to stay “nimble” on pricing of the iPad, possibly lowering prices if the newly unveiled tablet device fails to gain traction among consumers.

(Top prize goes to Engadget for their humorous response/headline, “Apple to be ‘nimble’ on iPad pricing, athletic on pommel horse”.)

Phillips quoted a note from Credit Suisse analyst Bill Shope who, following a meeting with Apple executives, said;

“While it remains to be seen how much traction the iPad gets initially, management noted that it will remain nimble (pricing could change if the company is not attracting as many customers as anticipated),”

This only bolsters my long-held belief that analysts are, apparently, paid for pointing out the blindingly-obvious. That tendency to wrap together common sense and “what we all knew anyway” as “something new and worthy of reporting” is usually exemplified by Gene Munster, but since he’s been quiet for the last week or so, I guess Shope will have to do.

(I predict that, in the weeks ahead of the iPad launch, Munster, or some inspired analyst like him, will issue a note to the press proclaiming, “Apple’s App store sales will perform better in this quarter than in the same quarter last year.” Or it’ll be something even more obvious, like “Apple will sell more iPads this year than they did in 2009…” and I guarantee the tech press will rush to report that ‘advice’ like it’s vitally important “news.” You just wait and see.)

Confidence

The point here is that Apple is doing nothing revolutionary or surprising by admitting the fact that, according to the ebb and flow of consumer demand, it will revisit its pricing strategy for the iPad. This is what all businesses do with all products, all the time. Apple is always revising its prices; MacBooks, iMacs, iPods and iPhones get at least one price change on an annual basis. It’s not a big deal that they will do the same for the iPad, and it certainly doesn’t point to any lack of confidence in the product itself.

Let’s not forget the infamous iPhone price-cut of ‘07; after launching the iPhone with a hefty $599 asking price, Apple reduced it by a whopping $200 just a few months later. The only difference between then and now is Apple’s transparency (yeah, I can’t believe I said that either). During his keynote presentation late last month, Steve Jobs said of the iPad; “We want to get this into the hands of as many people as possible.” That is, after all, the overriding reason for the agreeably-low price of the entry-level iPad.

Here Come the Trolls

Sadly, the predictable fan-baiting didn’t take long, with the likes of Should-Know-Better-Than-That Windows evangelist Paul Thurrott writing, in a blog post provocatively entitled “Do Not, Under Any Circumstances, Buy an iPad”;

Following news that I was right about Apple’s decision to not allow iPad pre-orders would cause many potential buyers to reassess things, comes this unbelievable bit of news directly from Apple itself: The company said that it would aggressively lower prices on the iPad if/when it doesn’t take off in the marketplace.

Aside from the clumsy jumble of clauses and inventive use of the adjective ‘aggressively’, (as far as I can see, neither Shope nor Phillips ever used that word) I really want to point out, one last time, and for the record — this is not “unbelievable” news. Far from it. It is, in fact, the most ordinary, run-of-the-mill, standard business practice, entirely believable news one could expect from a consumer electronics company. (Quite what Apple’s flexible pricing strategy has to do with Thurrott’s theory about the inability to pre-order an iPad is beyond me; can anyone say “straw man?”)

It comes down to this; the wider tech press are, inexplicably, falling over themselves to write-off the iPad as a failure before it’s even out of the starting gate. (Don’t forget, the iPod was panned by critics and tech “experts” when it first launched. The iPhone was subject to its own fair share of harsh criticism, too.)

No one can say exactly how successful the iPad will be, and while there’s no harm in speculating (after all, much Apple coverage is precisely that) it’s sad to see how some corners of the tech community choose to interpret every little thing Apple does (or says it might do) as “evidence” of failure.

I think I’m being rational and level-headed. You might think I’m a shameless fanboy. Either way, let me know exactly what you think in the comments below.

Related GigaOM Pro Research:

• Web Tablet Survey: Apple’s iPad Hits Right Notes
• 5 Tips for Developers Targeting the iPad
• How AT&T Will Deal with iPad Data Traffic

Those disappointed that the music event last week failed to update Apple’s all but forgotten set-top box, may find hope in the company’s move to lower the price of the 160GB Apple TV by $100, to $229.

That new price for the 160GB model was the old price for the 40GB model, which is no more, and that is cause for speculation in itself.

At the beginning of the month, AppleInsider reported Piper Jaffray analyst Gene Munster noting long wait times for the 40GB model, resulting in predictions of a minor upgrade at the then rumored Apple event. That would be followed by a major upgrade of the Apple TV later this year, one that might include DVR capabilities. That first prediction proved to be incorrect, and, unfortunately, DVR capabilities will not be coming to the Apple TV, either.

Again via AppleInsider, Caris & Company analyst Robert Cihra put an end to the DVR speculation about a week later at a meeting with Apple CFO Peter Oppenheimer. At that meeting, Oppenheimer said plainly that the DVR concept “just doesn’t fit Apple’s business.” Sadly, that business to date has been forcing the Apple TV into the role of an iTunes Store kiosk in the living room.

So, whither Apple TV? The price cut/storage bump provides a glimmer of hope, assuming the change is not a final, indifferent attempt to stimulate lagging sales, but let’s pretend it’s not. Clearly, the future of content consumption in the living room will be streaming. If the Apple TV is to survive, Apple needs to acknowledge this in a big way, creating “channels” in the software for the major players: Netflix, Hulu, even Amazon Video on Demand. Sure, that will impact iTunes rentals and video sales, but not as much as a failed product that ends up being canceled.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Apple’s Path to the Living Room
• Smart TV forecast: gigabit Wi-Fi in the living room
• How consumer media will change in 2013

By far the most effective commercials recently have featured Microsoft’s “Laptop Hunters,” normal folks who desperately need a new laptop,  and so are charged with the task of going out into the big wide world (which would be Best Buy and the Apple Store, it seems) and finding a machine that meets their needs. The hook? If they find one for under a specific sum, Microsoft will buy it for them.

My fellow TAB writers have covered some of the issues raised by (and in) these ads. Tom Reestman has looked at the wonderful omissions and deflections from the truth they contain (check them out here and here and here) while Charles Moore recently asked whether Apple’s high laptop prices are sustainable in today’s economic climate.

Now, according to a report by BrandIndex and covered in some detail over on AdAge.com, Microsoft’s laptop hunter commercials are starting to pay off. For the first time this year, the perception of value for money that 18- to 34-year-olds have of Apple’s laptops has dropped, while Microsoft has gained ground.

Which is to say, younger consumers are starting to believe that Apple’s MacBook products are poor value for money when compared with Windows-based laptops. This graph from BrandIndex illustrates the shift. (The brown line is Apple hardware, the blue line Windows-based hardware.)

Ouch.

Of particular note is the time period of this perception-shift. As recently as mid-April, Apple’s perception scores were riding high — a lot higher than those for Microsoft, in fact. And then, around the beginning of May — boom! The scores became inverted, and suddenly Microsoft is well ahead.

Ted Marzilli, global managing director for BrandIndex, suggests the change is driven by economic conditions. Put simply, younger people have less money to spend and so choose cheaper alternatives to Apple’s unashamedly expensive hardware.

“Apple did a great job of putting Microsoft on the defensive,” Marzilli told AdAge.com. “It made them look old, stodgy, complicated to use and unhip. But Microsoft has started to hit back, and younger folks are more cost- or value-focused.”

Unhip? Who says that any more? It’s not even actually a word.

Anyway, what about older customers? Aren’t they looking to save money, too? According to BrandIndex, the scores between Apple and Microsoft in the 35- to 49-year-old demographic are virtually identical. So we can conclude that:

1. Older consumers have more money to spend even in the middle of a recession, and/or
2. Older consumers aren’t the slightest bit impressed by the Laptop Hunter commercials.

But can we be sure that it’s Microsoft’s latest ad campaign that has caused such a dramatic shift in the younger market? Marzilli thinks so. “It would be very unusual for Microsoft’s score to be increasing this much and Apple’s to be decreasing without some sort of event driving that, like a major campaign that’s particularly successful,” he toldAdAge.com.

Certainly, then, it appears that Microsoft’s advertising is playing a central role in this little drama. However, in the background, Apple is definitely playing a supporting role, whether it wants to or not.

A Simple Matter of Mathematics

You see, if we assume the younger demographic polled by BrandIndex (a good proportion, say, the 18- to 24-year-olds) are mostly college students with very limited incomes, it becomes painfully clear that in this area, at least, Apple is missing a trick. The cheapest MacBook is just too costly for most young people to afford. Even the nominal decrease in price the entry-level MacBook enjoyed late last year — down to an “affordable” (Jobs’ own word) $999 from $1,099 — simply wasn’t a steep enough drop.

Five hundred or six hundred dollars will buy a Windows-based machine that is more than adequate for carrying out the basics of personal computing. The usual suspects — email, text-editing, web browsing, and simple media-management — are all covered with the software baked in to most versions of Windows. Sure, it won’t be a sleek anodized-aluminum beauty. It’ll weigh about a ton, offer paltry battery life and, after six months of daily use, be about as nimble and quick as continental drift.

But it’s still half the price of an entry-level MacBook, and if the buyer isn’t already tuned in to the advantages (both real or perceived) of owning an Apple computer, the decision is going to be very easily made; $1,000 on a shiny Mac or five hundred bucks on a respectable laptop? The former costs an awful lot of money. The latter leaves plenty of green for added software, peripherals and, of great importance to these young ‘uns, extracurricular activities.

No one needs an ad campaign from Microsoft to work out the economic returns in making that decision, but it certainly appears to be helping.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• Mobile Q2: Smartphone growth surges; iPad’s rule continues
• What Google’s Honeycomb Means for Apple and Microsoft
• Mobile App Developer Survey: Profiles, Platforms and Monetization

When I wrote about the MacBook earlier, I mentioned that Apple’s strategy to make it more of a MacBook Pro “lite” was rather amazing.

Rather than bring down their laptop’s entry level, as everyone insisted and expected it would do, Apple chose to dramatically bring down the laptop’s “pro” level instead. The smaller screen (actually an advantage in terms of size and weight), lack of FireWire, and less powerful (but still greatly improved) graphics are the main differentiators. Well, except for that $700 price difference!

Time will tell if this proves to be a successful move, but I think it will. A lot is made (rightly so) of the economy. Apple can’t control that, but what they can control, they did a great job on. Further, while in such economic times it’s true that people tend to spend less, it’s also true they tend to strive harder to get bang for their buck. The new MacBooks are going to be viewed as “pro” models for consumer prices. That will be their appeal, and I don’t think it should be overlooked. Heck, I’m even considering buying a new MacBook and I didn’t even think I was in the market.

Meanwhile, Apple did take yesterday’s entry level White (plastic) MacBook and dropped the price to $999. Sadly, analysts who refuse to even consider replacing one strategy (from a company that’s been pretty darn good at strategic thinking) with one they’ve been married to for a few weeks seem to think that that was the significant announcement today.

I sometimes wonder how these people get their jobs. This is not the first time Apple has offered a laptop at this price point. Yet, that $999 iBook didn’t exactly take the computing world by storm. And I can’t help but wonder why there are there such high expectations for this machine when a similar occurrence four years ago has already been forgotten by the very pundits claiming it’s so important today, and a first for Apple.

Related research and analysis from GigaOM Pro:
Subscriber content. Sign up for a free trial.

• How do developers ride the Siri wave?
• Connectivity means making the machine disappear
• The future of notebooks: Following in the footsteps of the MacBook Air