iPad 3 for $299 ... no, and here's why

iPad 3 for $299 ... no, and here's why

Summary: Cheap iPads for all? Don't hold your breath!

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TOPICS: iPad, Browser, Mobility
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Over on ZDNet's Laptops & Desktops blog, Sean Portnoy speculates about possible aggressive price drop for the iPad 3 once it's released. Could Apple really sell the entry-level iPad 3 for $299?

Here's Portnoy's theory:

But would Apple get even more aggressive? After all, the iPad 2 supply could be limited, and once they’re gone, then its cheapest slate would only be $399, which more Android tablet makers can match (like the Sony Tablet S). Could the company drop the iPad 2 price all the way to $199 to match the Kindle Fire and then charge $299 for the new entry-level iPad 3?

Currently, the entry-level iPad 2 sells for $499 (16GB, WiFi), but the rumor mill is in full swing and is speculating about a $100 price drop for the entry-level units, with a higher-priced 'retina display' model with a 2048x1536 being available for $499.

I have several problems with this.

  • I'm not convinced that Apple will release a 'retina display' iPad 3. While it's a sexy idea, a 2048x1536 screen is really dense and would play HD 1080 videos windowed which would mean the density would work against the device for media playback. It also takes a lot of horsepower to push that many pixels to the screen, and more power means more battery consumption. So the case for 'retina display' still needs to be made.
  • The BOM (Bill of materials) doesn't make sense. It's estimated that the BOM for the iPhone 4S is nearly $200, but an unlocked, unsubsidized handset will set you back a whopping $649. Apple is not in the razor-thin margins business. Apple might be able to strongarm carriers into carrying the iPad as a contract line item and be able to sell them cheaper, but the iPad sells well as it is without contracts and such.
  • Why does Apple need to engage in such aggressive price cuts? It's already selling iPads as fast as it can make them and there's no serious competitor in sight. A price cut would only put more (unnecessary) demands on the supply chain. So again, where's the incentive.
  • Apple is not known for such aggressive price cuts. The company knows that once a price drops, there's no way to push them back up.
  • Kindle Fire isn't that much of a threat to the iPad. The Kindle Fire sure is a threat, but it's a threat to other Android tablets and not the iPad. Unless we see a dramatic showdown in iPad sales over the coming quarter there's no need for Apple to do anything drastic.

So, am I expecting a $299 iPad 3. No, I'm not, and neither should you.

Topics: iPad, Browser, Mobility

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44 comments
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  • I agree with you on that one

    iPad has a monopoly and prices do not fall when there is a monopoly. Monopolies are not there for the benefit of the consumer, they are there for the benefit of the monopolist which is Apple in this case.
    toddybottom
    • RE: iPad 3 for $299 ... no, and here's why

      @toddybottom
      Having a killer product that none of your competitors can match doesn't make you a monopolist.
      It's not up to Apple to slow down, it's down to the competition to catch up.
      Englishmole
      • Actually, yes it does

        @Englishmole <br>"Having a killer product that none of your competitors can match doesn't make you a monopolist."<br><br>Actually, yes it does.<br><br>"It's not up to Apple to slow down, it's down to the competition to catch up."<br><br>I agree and have never suggested otherwise. Unfortunately, we have government agencies here in the US and over in Europe that don't agree with you. They believe that the leading company must slow down so that competitors don't have to innovate. We are left with Windows without a mail client, without a media player, and a browser ballot box. The competitors (like OS X) are not required to cripple their OSs.
        toddybottom
      • RE: iPad 3 for $299 ... no, and here's why

        @Englishmole<br>So IE and Windows XP in 2000s' were not monopoly by your definition?
        Samic
      • RE: iPad 3 for $299 ... no, and here's why

        @toddybottom: It is not illegal to have a monopoly but it is illegal to ABUSE a monopoly.

        Apple hasn't (yet) overtly abused their monopoly position in tablets. Whether they'll tread too close to the line as competition heats up we'll have to wait and see.
        bitcrazed
    • actually yes it does

      @toddybottom
      because... you say so?
      oneleft
      • No, because that is the definition

        @oneleft
        The definition of what makes one a monopolist does not depend on how one got their monopoly. A monopoly is a state of being and is not descriptive of how that state was achieved. Apple is a monopolist because they have a few monopolies.
        toddybottom
      • wow

        @oneleft
        that's a whole lot of saying nothing. you want to try that again?
        saying, ad nauseum, that apple is/has monopolies does not make it true.
        oneleft
      • So calling MS Windows a monopoly is wrong

        @oneleft
        because saying it doesn't make it true.

        What is the definition of a "monoploy"?

        Are you saying that Apple doesn't have a monopoly on MP3 players, even considering that 78% of all MP3 players sold are iPods?
        William Farrel
      • RE: iPad 3 for $299 ... no, and here's why

        @William Farrel
        No, Microsoft Windows has had monopoly status, in the legal sense, because the U.S. Federal Court System declared it to be so under the Sherman AntiTrust Act as a 'finding of fact'.

        Also, I would point to the numerous times that various Microsoft proponents point out that "everyone uses it" as an argument for Windows' alleged superiority. These aren't people arguing the monopolistic nature of the beast, but their specious arguments for Windows superiority do support (to an extent) the market domination required for monopoly status.

        FWIW, at this time I believe that Apple has a monopoly (virtual or actual could be argued) in the tablet computing space and a near monopoly in MP3 players. In and of itself, that status is not legally wrong.

        If it were demonstrated that Apple has leveraged that monopoly to discourage partners from supporting other platforms, then they would be guilty of illegally abusing that monopoly position under various laws (Sherman Act included). That leverage has yet to be brought to court, let alone proven so the situation is not exactly comparable.
        use_what_works_4_U
      • RE: iPad 3 for $299 ... no, and here's why

        @oneleft @macadam A monopoly is the exclusivity / control of a market. In tablets and MP3 players, Apple has a "near monopoly", just as Microsoft had / has in the desktop operating system market.

        That is a fact. Being a monopoly isn't bad and sometimes can't be helped - when you invent something new, which is a new market segment, you are automatically a monopoloy in that segment, until others come along and make similar goods.

        Abuse of that position to force others out of that market (Microsoft with IE vs. Netscape, for example or MS-DOS vs. CP/M 86 and DR-DOS) is another matter.

        Apple have a monopoly position in the tablet market at the moment, because they redefined the market and made a great product, the competition is trying to play catch-up, but they are facing Apple's monopolisation of that market.

        As long as Apple don't abuse their position (like trying to bad mouth other products, force suppliers to take their products in preference to others, sell at a loss to drive competition out of the market or, oh, I don't know, try and ban competitive products because they are a black rectangle), there is nothing technically wrong with having a monopoly in a given market. If there was something wrong, we would never see new market segments spring up.

        Just imaging if somebody had told Gottlieb Daimer, that he couldn't market vehicles with an internal combustion engine, because he would have a monopoly on that market!
        wright_is
    • Depends how you define a market...

      @William Farrel
      If you define a market narrowly enough Every single product made has a monopoly in its own market. Today, almost every smartphone sold is also an MP3 player. And Android is leading the sales in those.. Monopoly status in itself is a common and transient one in every industry and there is nothing wrong with it in itself. It is up to the courts to decide whether any company abuses it's position as market leader to prevent competition.

      Keep in mind, this time 2 years ago the same people here were claiming that Apple held an unbreakable monopoly in smartphones, just before the Android platform surpassed Apple in smartphone sales. So it could be that message-board claims of predatory monopoly status might not mean that much in the real world.
      Tigertank
  • RE: iPad 3 for $299 ... no, and here's why

    Apple rumors are getting kinda annoying. They're almost never right, but people continue to spread them. Case in point: "Apple to release two iPads in 2012?". Who cares. If you have that much burning your pocket, donations to my student loans are always welcome!
    The one and only, Cylon Centurion
    • RE: iPad 3 for $299 ... no, and here's why

      @Cylon Centurion with the exception of the last iPhone the rumors have had a lot of accuracy to them on reputable sites.
      slickjim
      • RE: iPad 3 for $299 ... no, and here's why

        @Peter Perry
        After just about every "reputable" site published stories about the iphone 5 as a fact and not a rumour... I'll hold off believing anything until it is announced by Apple.
        kstap
    • RE: iPad 3 for $299 ... no, and here's why

      @Cylon Centurion

      Now what would any of us get out of paying your bills?
      LP212
    • RE: iPad 3 for $299 ... no, and here's why

      @Cylon Centurion

      Mine first!

      Kidding.

      Without workers to earn the money to spend, these companies using our talent would go under too
      HypnoToad72
  • RE: iPad 3 for $299 ... no, and here's why

    Apple created a 3 tiered structure with the iPhone 3Gs, 4 and 4s... if they don't do the same with the iPad then the one two punch of the Kindle Fire and Kindle Tablet will bury them in a hurry. Crud, the fire challenged the iPad all through the holidays in limited markets!
    slickjim
    • RE: iPad 3 for $299 ... no, and here's why

      @Peter Perry <br><br> [i] if they don't do the same with the iPad then the one two punch of the Kindle Fire and Kindle Tablet will bury them in a hurry. Crud, the fire challenged the iPad all through the holidays in limited markets![/i]<br><br>I am willing to bet that the majority who bought Kindle Fires were NOT in the market for an iPad anyway. A $300 price difference and screen size difference. <br><br>Apple sold a record 11.2 million iPads last quarter. Some are estimating the iPad will sell 15-16 million during this past holiday quarter (growth). Amazon Fire likely sold 4-5 million units this holiday season. <br><br>As I've been saying, there's room for both devices to continue to grow without necessarily affecting the other. The Fire mainly took sales from the other competitors, not necessarily the iPad.
      dave95.
      • I agree with you totally

        @dave95.
        Those saying that iPad doesn't have a monopoly because the Kindle Fire is selling a few million units are totally wrong for all the reasons you wrote. Nice post.
        toddybottom