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Apple slashes annual back-to-school offer, pushes apps

Switch from iPod rebates to $100 iTunes gift card shows Apple's confidence in market position, says analyst

June 16, 2011 12:07 PM ET

Computerworld - Apple today rolled out its annual back-to-school promotion, but unlike years past offered a $100 iTunes gift card to customers who buy a qualifying Mac.

In each of the last three years, Apple had given rebates of up to $249 toward the purchase of a new iPod Touch or other iPods as a carrot for students.

This year's promotion, which runs through Sept. 20, gives students, parents, teachers and staff members the $100 gift card when they buy a new iMac, Mac Pro, MacBook, MacBook Pro or MacBook Air. Refurbished Macs and the Mac Mini do not qualify for the deal.

The gift card can be used for purchases at Apple's digital content marts, including the Mac App Store, iOS App Store, iBookstore and the iTunes store.

Apple's decision to drop the iPod rebates shows the company's confidence, said Ezra Gottheil, an analyst with Technology Business Research.

"I'd say they're feeling pretty confident in what they have in market share," said Gottheil. "The earlier rebates drove adoption of the iPod Touch, but now it's a very successful product -- more than 50% of the iPod business -- and they don't feel a need to do more for it."

Some kind of promotion was necessary, Gottheil added, noting that customers have come to expect one, and were deferring Mac purchases until it appeared.

At the same time, Apple's dramatically reduced not only the amount of the offer itself -- the $100 is half of last year's rebate -- but also slashed the cost to itself.

"I do think it's a less attractive offer," said Gottheil, "but they've reduced the cost to themselves by pushing people to the Mac App Store. A lot of the software people will buy [with the gift card] will be Apple-branded, and we know that software has a lovely gross margin."

Customers who already own a Mac, for instance, will be able to use the gift card to buy the Lion upgrade, which Apple plans to release next month for $30.

"Apple no longer has to make deals," said Gottheil, giving his take on Apple's move. "So why not take money off the table?"

Apple's promotion is in stark contrast to the one that Microsoft and some of its OEM partners kicked off last month.

Microsoft's deal gives students who buy a qualifying Windows 7 notebook a free Xbox video game system that's worth $199.

The regular student and educator discounts for Mac purchases also apply during Apple's three-month promotion. Those discounts range from $50 on the entry-level MacBook Air and $100 on the MacBook and iMac, to $200 on some MacBook Pro models and $450 on a 12-core Mac Pro.

More information about the back-to-school promotion can be found on Apple's site and in the deal's terms and conditions (download PDF).

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at Twitter @gkeizer or subscribe to Gregg's RSS feed Keizer RSS. His e-mail address is gkeizer@computerworld.com.

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