A low-cost iPad 2 would decimate the tablet market

A low-cost iPad 2 would decimate the tablet market

Summary: A low-cost iPad 2 makes all the sense in the world and Apple would be foolish not to do it.

TOPICS: iPad, Mobility

$399 iPad sends chill up the spines of Android tab OEMs - Jason O'GradyOn last night's PowerPage Podcast Rob Parker and I discussed the potential impact of a low-cost iPad and how it would decimate the floundering tablet market.

The topic came up based on a rumor that Apple will keep the 16GB Wi-Fi iPad 2 in the product lineup when it announces the iPad 3 next week -- presumably at a lower price. I opined that a low-cost iPad would be the ultimate strategy for Apple and probably be a death blow to the raft of poorly-selling Android tablets in the channel.

Imagine what a $399 (or even $349) iPad 2 would do to the rest of the market.

It would simply obliterate it. It would make the decision between a $200 Kindle Fire and a cheap iPad 2 much, much harder. It would also make the decision to go with an iPad much easier for parents and grandparents who are uneasy about spending $500+ on what's perceived to be a "premium" priced or luxury product.

Heck, it would practically be disposable!

But where it hit home for me was in education. Parents and educators are (understandably) concerned about giving 10-14 year olds a $500 slab of aluminum and glass. You can probably imagine what would happen to an iPad after getting tossed around in a careless student's backpack for even one day.

While a price drop won't do anything to help the iPad's inherent fragility, a $350 or $400 tablet is much easier to justify for a student than one that crosses the psychological $500 price barrier -- without any accessories. Not to mention that $100-150 can but a lot of sleeves, cases and apps.

When you factor in powerful educational tools like iBooks 2,  iBooks Author and iTunes U a low-cost iPad seems like a no-brainer. Apple could sell low-end iPad 2's at cost (or even a small loss) and inflict even more pain on the rest of the tablet market.

DigiTimes posted a rumor (via MacRumors) that Apple will release an 8GB iPad 2 (down from the current low-end, 16GB model) alongside the new high-resolution iPad 3 at its press event on March 7.

Boom! There's your $349 iPad.

Unfortunately, the low-cost iPad 2 will probably be priced at $399 because Apple has a knack of charging about $50 too much on these things. But, regardless of price, a lower-cost iPad 2 makes all the sense in the world and Apple would be foolish not to do it.

What's the sweet spot for you to buy an iPad? What about for your parents? Or for your kids?

Photo: MacRumors

Topics: iPad, Mobility

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  • Hadn't thought of that . . .

    Apple have done it with the iPhone 3GS and 4, so why not with the iPad2. I agree, it would likely have a massive impact on the tablet market.
    • Maybe not...

      It would kill the original iPad and leave those users swinging...

      The cheaper iphone4 and before it the 3GS created a blip but not much more.
      The challenge here is if the iPad3 is significantly better, the iPad2 will be seen as lackluster further reducing any impact.

      Increase Apple unit numbers? Yes.
      Kill the tablet market? No.
    • Apple did this last year

      When the iPad 2 came out last year, the remaining first generation iPads were sold for $100 less (starting at $399).

      Apple only did this until stocks ran dry, but considering that this year after coming out with the iPhone 4S, they decided to continuously sell the iPhone 4 for $99 and the iPhone 3GS for $0, it's likely that they will have a continuous lower price point for the iPad 2.
      Harvey Lubin
  • Windows 8 will change this equation

    After installing and using the CP Windows 8 will give the iPad a run for its money.
    • It is not about the OS, but the price

      The point of the article is about the price and ow it will affect the market. I doubt that W8 devices could be anywhere near as cheap as the iPad 2 in the context he discusses.
    • I think the killer feature of Windows 8 would be...

      ...releasing it as an app on the ipad. Hear me out! If Microsoft created a virtual server farm, so when you bought Windows 8 your licence key unlocked a synched copy of your system on the cloud with, say a 500Gb HDD on the server. Then you could remote desktop into your system when away from it, still use your system offline (on your local copy on your PC or laptop) while auto sync when internet connected, it could even replace the Chromebook system - have a (really) thin windows client and boot to the remote copy of windows you have. Then, if you had a thin client program on the iPad that would boot to this remote version of Windows 8 but still allowed the remote version to utilise all forms of input from the device (Camera, audio, all sensors, multitouch screen) not only do I think MS would sell more licences for Windows 8, and give it a great purpose to upgrade beyond Windows 7 (Sync between ALL of your devices! All your work on any device!)

      Just my thoughts as an ex-MicroSoftie.... #ShouldNotHaveLeft
      • maybe?

        With this approach you could just connect to a Windows 8 PC at your house over the Internet and screen share it. I believe these apps exist already.

        I like being able to use the device without having an Internet connection at times.
      • OnLive beat Microsoft to this...

        OnLive Desktop, with a good connection to the internet (~4 megabit), makes for a compelling Windows 7 experience. You know they'll upgrade their systems to Windows 8.

        And unlike what Microsoft would offer, OnLive gives consumers a free option. Microsoft would probably want $100 up front and $10 a month for access.
    • This is starting to get old.

      We've heard how Zune with its early version of metro was going to compete with the iPod. Then how WP7 with metro UI was going to shake-up the world and have everyone replace their boring grid of icons. Now we are hearing (again) how metro-style will have a massive impact on the tablet market.
      • Have you used WP!

        The Lumis 900 won Best of CES! Wake Up! Xbox's Metro UI is great!
      • Metro screwed up the XBox interface.

        @jatbains Even Gamer Jesus knows this.

      • @jatbains: the Xoom won best of show at CES 2011.

        WP7 is good but being best of show means nothing.
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  • How to get there

    I wonder which is cheaper to build, an 8G iPad2 or a 16G iPad3 with an 8-inch screen? The latter has the advantage of driving volume on all the components in the iPad3 except the display and case.
    Robert Hahn
    • I'm pretty sure a 8 GB Apple tablet is DOA

      It's just a psychological barrier. In today's world, 8 GB machines (I have a 8 GB iPod Touch) really limits the functionality of the device. There is just so many apps to choose from and install plus video, photo and music content to store that limiting a consumer to just 8 GB is really a counter productive cost/performance trade-off.

      But your point, Robert, about the cost of an 8 GB - 8 inch iPad tablet designed for the educational market primarily is well taken and "might" have enough market advantage to warrant the manufacturing "go-ahead" to produce such a product.
      • Agreed.

        I just don't see Apple releasing a 8gb 10" iPad, especially with the whole 25 billion app download countdown. I also have a 8gb (2G) iPod touch and I find myself constantly clearing up space to make room for new apps and content. It would be worst with the iPad.

        I don't think going from (16gb - 8gb) will make that much of a difference in savings anyway with the 10" iPads. Especially with the deals they get now on bulk component purchases. If they are looking to scale back cost, and introduce cheaper iPad for school, teens etc, the screen-size would be the number one component they would turn to, not memory size.
      • It's more than psychological

        8GB is just too little to be useful. My 16GB iPad 2 is causing me all sorts of unwanted compromises between what I want and what I can actually have in terms of apps, music, video, etc. It's too much time wasted doing storage managment. I bought the 64GB iPhone 4S and will only ever by devices with the maximum storage going forward.
  • Impacts Apple as well

    What happens to the iPod touch line? How does iPad impact traditional Mac line sales?

    While price is important, functionality is a huge factor depending on needs. With Apple you are not buying a device, you are entering their ecosystem. I have no need for media, use very few Apps. As much as I want to use the iPad a half baked RIM Playbook offers more functionality at this point. Not to mention Amazon, B&N who have their own ecosystem as well.

    If price was the #1 consideration Kindle Fire and Playbook would be killing it
    • re: impacts Apple

      The iPod touch is still a nice little mp3 player and handheld gaming system that you can slip in your pocket. Even a smaller iPad is a different target audience, although obviously some people might move up.

      Price is the #1 consideration for some, but value is probably more important - if you take the quality of the iPad and make it even cheaper, the value increases. It doesn't eliminate every other device - e-ink readers for example - but it squeezes their value into a smaller niche.
    • Sure, it will impact Apple in a positive way.

      [i]"What happens to the iPod touch line? How does iPad impact traditional Mac line sales?"[/i]

      The iPod touch is in a whole different market from the iPads. If someone is looking for a small digital music/app/gaming device they can easily slip in their pockets, they are not looking at the iPad. If someone is in the market for a phone, they're not looking at the iPod Touch. If someone is in the market for a large display consumption device, they buy an iPad. someone is in the market specifically for a notebooks (all about productivity), they're buying a MacBook or MacBook Air. It's all about the market segments. Mac sales are at a all time high btw, the iPad could actually be causing a "halo effect" on the Mac line.

      Apple if they want could branch-off the iPad into two segments, those looking for a device with a larger display, more power, features, productivity etc, and those just looking for mainly a cheaper device for consumption, smaller display (stepping stone towards the larger more powerful iPad). Look at how they segmented the iPod line over the decade as an example from small shuffle to larger more memory iPod classics to iPod Touch. Look at the smaller cheaper netbooks vs more powerful notebooks/laptops.