The iPad - Bittersweet for UK retailers

Online, March 16, 2010 (Newswire.com) - UK electricals retailers have had a tough time of it in recent years. Consumer confidence has disappeared, there has been a dearth of new technology and intense competition (particularly from the internet) has driven profit margins to new lows.

Surely, then, the likes of Currys and Argos must be anticipating the arrival of the iPad with barely contained glee and relief? Well, while that may once have been true, in 2010 it is no longer the case. The reason that the iPad is far from the retail saviour it could have been, is that it is likely to prove another major step forward in the development of contract purchasing.

It all started with phones. Manufacturers and service providers have cottoned on that providing a product to entice someone into a contact is a savvy move, if you can then get that person to commit to a guaranteed minimum monthly payment. Subsequently, the growing importance of online connectivity across various different gadgets has allowed them to roll this model out to new devices, with netbooks and laptops the most prominent example.

With so much of its functionality derived from internet connectivity, the iPad is a prime candidate to extend this model even further. While retailers can still stock them, they are ultimately getting a much smaller piece of the pie than in the 'golden', days where they could sell the item for a flat fee and bolt on extras such as warranties.

The official name for it is 'disintermediation' - the process of retailers being removed from the chain. And if we look back one day, having reached the point where we get all our gadgets and electricals products directly from the manufacturer/service provider, we are likely to remember the iPad as a significant step in the development.