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iPad 2 announced, original iPad price drops. Tablet game over.

By | March 2, 2011, 12:17pm PST

Summary: Here’s what you need to know about the iPad 2: it’s thinner, lighter, faster, got cameras and is more capable than the iPad, for the same price. It shuts out the competition, and it is game over for tablets.

Apple unveiled the next generation iPad today, the iPad 2, and as expected it is an evolution of the tablet from Cupertino. I won’t detail the specifications of the iPad 2, you can get a good look at it on the Apple web site. Here’s all you need to know about the iPad 2: it’s thinner, lighter, faster, got cameras and is more capable than the iPad, for the same price. Apple had dominated the tablet wars with the original iPad, and with the iPad 2 it is game over.

Features and gimmicks aside, Apple has won the tablet war through aggressive pricing. Competitors have already had a tough time releasing tablets at the original iPad price point of $499, and now that this price gets you an improved iPad 2 the competition has been completely blocked out. Due to Apple’s volume hardware component deals, it can build iPads far cheaper than anyone in the business. Plus, as ZDNet’s Jason Hiner correctly points out, Apple’s retail business allows it to sell a lot of iPads without pricing concessions to the wholesale market. The iPad business is more profitable than the competition’s will ever be, and at a lower price point.

As if the iPad 2 wasn’t enough to cause executives at Apple’s competition to lose sleep, the price of the original iPad has been dropped to $399. This is so far below what it costs OEMs to make tablets, the game is over. Apple will continue to maintain or grow its market share in the tablet space, and the competition will release tablets that are not as good and cost lots more than the iPad/iPad 2. Rarely does one company in the technology sector dominate a product category so totally as Apple does the tablet space.

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James Kendrick has been using mobile devices since they weighed 30 pounds, and has been sharing his insights on mobile technology for almost that long.

Disclosure

James Kendrick

James Kendrick has no affiliations or relationships that need to be disclosed.

Biography

James Kendrick

James Kendrick has been using mobile devices since they weighed 30 pounds, and has been sharing his insights on mobile technology for almost that long. Prior to joining ZDNet, James was the Founding Editor of jkOnTheRun, a CNET Top 100 Tech Blog that was acquired by GigaOM in 2008 and is now part of that prestigious tech network. James' writing has appeared in many print publications: Smartphone and Pocket PC Magazine, Information Week and Laptop Magazine to name a few. James' coverage of the mobile technology sector has regularly appeared in the New York Times, Salon.com and CNN/ Fortune online. Not just a writer, James has filmed numerous video reviews and how-tos that have garnered well over a million viewers. He has appeared on local news segments and been interviewed by the Associated Press on mobile technology topics. Additionally, James has been podcasting about mobile technology for years.

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RE: iPad 2 announced, original iPad price drops. Tablet game over.
lkcantwell 4th Mar 2011
iPad haters need to get a life. There's nothing like the iPad, even if it doesn't have a USB port.
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Game Over? Or just begining?
Will Farrell 2nd Mar 2011
Look I understand the headline and story have to bait a reader in, but come on, game over?

So you are saying that nobody should create a tablet? that we should just stick with iPad and be happy to get what little it gives?
@Will Farrell
I agree with your implied statement that innovation in product design or introduction of product should not be postponed or eliminated because of a prior "Status Quo" condition.

However, because Apple substantially changed the dynamics of a tablet design from the past ten years of WinTel efforts, it was able to succeed in the market arena.

If a competitor can do the same to the Apple tablet devices as Apple did to the WinTel convertibles, than by all means let "competition strive".

But if all else fails, adopting an Apple ecosystem solution for one's tablet requirements would not be a "bad thing". Its actually quite an enjoyable experience.
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Contributr
@Will Farrell I hope other companies keep trying, that's what makes for good competition. But they are going to have a tough, tough time of it, and not be very profitable.
@JamesKendrick
All it takes is flash memory to decrease in price.
@hoaxoner

If Flash memory decrease then Apple will also benefit. Remember the iPod? Apple bought-up the majority of NAND Flash from SanDisk etc in bulk at a cheaper price, leaving the competition to chase after the scraps. They are doing the same with the iPad.
offer, larger and smaller. I personally want say 11.5 inches.
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Contributr
@hoaxoner Apple is Samsung's (tablet competitor) biggest customer for components. They are completely set for any eventuality, including getting first dibs on memory or other components should there be a shortage.
@JamesKendrick,

If Apple is foreclosing competition by buying up supplies, I think it should be easy to prosecute.
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@JamesKendrick Samsung is a huge corporation with many divisions and lots of executives. I can tell you that the head of any division that produces components probably isn't getting a bonus based on the performance of the devices division. If Apple backs up a truck full of cash, the NAND guys will sell out the device guys in a heartbeat. Hell, Apple doesn't even have to back up the truck. The mere fact that everyone knows there's US$50 billion under a pillow in Cupertino and a willingness to use it, gives Apple procurement people entree into a Division Sr. VP or GM's office in the industry.
Now, by 2012, we might start seeing some viable competition, but, then comes iPad3.
Still not getting one. All these added features of iPad 2 but how much of it will get used? Cameras? really? They had them in laptops for years and weren't used.
@Loverock Davidson Congratulations. You won't buy an iPad2 (or any tablet). I'm shocked. Really.
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@samalie

be spoiled from a rotten user like Lovey, would we.....
It isn't game over by a long shot. Apple haters will never buy one because of their mind set and there's just no getting around that. There will always be the nonconformists and hold outs. There's also nothing wrong with that. In years to come the platform will evolve in every direction. Its just that for now Apple continues to dominate. How long that will last is just a "wait and see".
@I12BPhil "Apple haters" sounds dangerously close to sinners in this context.
@Juan Chulilla Use whatever context you deem necessary.
@I12BPhil

Great, if the platform evolves in every direction like you say, then Apple wins. It will be the one standout that's easy to grasp and heavily marketed (Think iPod). Remember there are more gen consumers out their leaking their chops today than there are "nonconformists" combined. Just ask Zuners and the anything but iPod folks how well that went.
@I12BPhil I wouldn't call myself an Apple hater, but I certainly will never purchase an iPad2. The reason is that I am an iTunes hater. If Apple wants to sell me an iPad, they better figure out how to let me set it up without connecting it to a computer that runs iTunes. And I really don't want to have to try (again) to convert my media library to iTunes to share media, so even then I probably wouldn't get one.

Hey, if I can set up my wife's Android cell phone while 1000 miles from home and without ever logging on a computer, why can't I do something similar with an iPad?
@jglopic Yeah. Heard of the App store? You do know you can download apps and configure the device FROM the device, right? You only need iTunes to sync it and back it up.
@jglopic A computer (Mac or PC) with iTunes is needed for initial setup of your iPad, and subsequent OS updates. Some apps with user-created data files also require you to sync to another computer via iTunes.

Other than that, your iPad is pretty much a stand-alone device for most of its use.
@I12BPhil
I think you are overestimating the number of "Apple haters" and "nonconformists/holdouts". They number, at most, 2% of the population and probably less. Most of the rest, who have the money available, will happily buy iAnything.
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Not a strategy
Robert Hahn 2nd Mar 2011
@Unusual1 Isn't that the truth? If you sat in a meeting at HP and told the executive committee that your marketing plan was to target "Apple haters and non-conformists," they'd fire your boss for not having already fired you.
Only 100 dollars cheaper for the iPad 1? Thank god. If it dropped any lower, I'd have a real dilemma on which to get.

Apple's biggest problem with winning a lot of people over has been price, but when they're not only competitive, but the cheapest option, there's no doubt who's going to win.
If the "game is over", as you say, will the iPad 2 be in short supply over the first several months and follow the original iPad sales history results?

Somehow, as good as the iPad 2 is (or potentially could be, barring any unforeseen "Antennagate" type issue), I suspect that Apple's supply chain will be more than able to handle any near term future sale's needs.
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Contributr
As I said it all comes down to price, and no one can compete with Apple in this space. There aren't enough "Apple haters" to generate sales volume big enough that a competitor can make a go of a tablet that costs more. Just my take on it.
James, I feel a little bit disappointed. Game Over? I expect to read that on any fanboy-flamboyant site like cult of Mac, but not from you.

Come on! It's the same joke as always with Apple. iPad 1 haven't cameras on purpose, and now... iPad 2 has cameras! it's magic! Revolution! Apple did it again!

Yep, there is the colours trick again, and that curious habit of make essential connections as separate, have-to-buy addons.

I'm not sure yet why a tablet is revolutionary, Apple or other vendor's. A revolution is started from a true necessity, and almost nobody needs a tablet. If you have a smartphone and a laptop, you can want to have a tablet, but you don't need a tablet.

Anyways, is quite soon to say that iPad 2 is going to repeat past success. Yep, the price is sweet, but I guess that capabilities are not in the higher level anymore. This time, competitors are prepared and, what is more important, they offer a good variety of devices in sizes, capabilities, extras.

You said that iPad 1 was less and less useful for you because of its format. I guess that the situation is the same now. Besides, chinese vendors are going to offer interesting devices and not only crappy devices. For instance, JTS light 2 with pixel qi screen is going to be a more innovative device that iPad 2 - it offer a true revolutionary capability, to read into a non-backlight screen - and I hope that price is not going to be crazy.

Do you want a revolution? wait for non-backlight devices, not only pixel-qi powered (I'm cautious about it's future, Notion Ink adam was not a good advance for them), but mirasol and liquavista products
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Contributr
@Juan Chulilla Apple currently owns 90% of the tablet market with the iPad. The iPad 2 is going to do well as it is better yet costs the same. Competitors have been releasing (or announcing) tablets at a much higher cost. That's what I'm talking about in this article.
@JamesKendrick You talk about Motorola and Samsung AFAIK. Maybe Asus. But there is going to be cheaper and not crappy tablets and, what is more important, more sizes and formats.

If Apple maintains such dominance in a year, it means that tablet is a totally conspicuous niche, since adaptations to different needings and scenarios would be less important than brand.
@JamesKendrick
How big is that market James? It seems to me that the market for these types of devices hasn't even reached maturity or has even been fully defined yet.

The iPad is a companion consumption device, plain and simple. Creation on tablets is difficult, to say the least. The iPad is also not truly mobile. It is more of a showy device. Until whoever couples tablets with true i/o devices and capabilities matching notebook space, it will never be a truly innovative idea. The Lenovo U1 vapor device at CES 2010 and 2011 was closer to innovative than the iPad. Will devices like that make it to market?
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Message has been deleted.
TRDRACER21 Updated - 2nd Mar 2011
  • Flagged
@JamesKendrick
So? Some people don't want and don't have and will never use iTunes. So, there will be tablets for them (which will be better than the iPads... the Xoom currently beats the iPad 2 on specs, and it came out earlier). There will be much, much better Android Tablets by Christmas. Will it be "game over" for iPad 2 at that point?
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@Droid101 iTunes is hardly the problem. In fact it's one of the iPad's biggest strengths. There 200 million active credit cards tied to ITMS accounts. That's where the money is for developers, and why, despite some major PITA rules. they flock to the iTunes App Store, Apple paid out $2 billion to app developers last year. That's a lot of $0.99 apps.
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@Droid101 iTunes is hardly the problem. In fact it's one of the iPad's biggest strengths. There 200 million active credit cards tied to ITMS accounts. That's where the money is for developers, and why, despite some major PITA rules. they flock to the iTunes App Store, Apple paid out $2 billion to app developers last year. That's a lot of $0.99 apps.
"This is worth repeating. It's in Apple's DNA that technology is not enough. It's tech married with the liberal arts and the humanities. Nowhere is that more true than in the post-PC products. Our competitors are looking at this like it's the next PC market. That is not the right approach to this. These are post-PC devices that need to be easier to use than a PC, more intuitive."
@CowLauncher

Great quote but it's somewhat of a waste re-posting it here amounts geeks that can't see the forest from the trees. happy
Ha I paid $50 less for my ipod video when that came out and now i can get an entire tablet for $400? Awesome, but why the eff isn't the ipod touch $200 then?
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MONOPOLY MONOPOLY
mlindl 2nd Mar 2011
That hue and cry should take about another hour to come out. Steve Jobs, the awesome "back from the jaws of death" and without question the finest CEO in the world of any company anywhere just fired the shot heard round the tech world. Bye Bye HP, unseated as number 1 notebook seller, bye bye all other manufacturers in tablets and before too long, the only Windows market remaining will be the corporate enterprise. Even that can't remain in tact in the US and Europe for much longer, people just don't want second best at work!

Brilliant day for Apple and kudos to James for having recognized this watershed moment in portable technology.
@mlindl
Why do you care? Are you on Steve Jobs' payroll?
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Right ... time to wake up
MobileAdmin 2nd Mar 2011
Do you really expect Apple to keep iPad 1 around .. this is a classic clear the channel pricing move. iPad 1 is done. They will blow out inventory and you won't hear about it again.

RIM's Playbook is still the device for me.

- Full internet support
- smaller
- better hardware specs
- Blackberry services intergration
- Full corporate security / management

Wonderful Apple made it thinner and added camera's and a better cpu. It matches everything on the market. I guess if you really want a white tablet or have been missing having Garage Band on a tablet the iPad 2 is the device for you.
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Yes it's channel clearing
oncall 2nd Mar 2011
@MobileAdmin

But that's not the point. The point is Apple has set the price bar even lower for competitors when they already couldn't meet the old price bar. The "new" low price point for a new tablet device is $399, period. So, you cannot afford a new iPad 2 at $499, just get an iPad 1 at $399 (or $349 refurbished) or you can wait until the iPad 3 is announced and get the current iPad 2 at $399 next year.
@oncall

No The point is people thinking iPad 1 @ $399 is something Apple will offer as part of the iPad catalog. They made no mention of iPad 1 and once stock is gone it will be dropped.

Anyone willing to take a profit loss can match $399 or come close. It's really all about the features you want and deciding what you value. Apple provides no value for me at all. Looks nice but functionality is lacking. Today was merely a slight hardware refresh. iOS 5 better fix some of the gaps Apple faces.
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I don't think anyone here
oncall Updated - 2nd Mar 2011
@MobileAdmin

Is making the assumption that $399 is a long-term deal. OK well maybe some people are assuming that other people are assuming that it is a long term deal. It is obviously a short term deal. Doesn't matter, at $399 that's the price to beat. A general consumer is not going to have the emotional attachment to technology quirks found on ZDNET. They will look at boxes of Xoom's at Costco for $600+ (no demo unit out BTW talk about piss poor marketing) and none of their friends have one to tell them how great it is, or shuffle over to the Apple store and hold a working unit in their hand that they can have for $399, or $499 for the next generation. Not a hard choice at all, any iPad is going to beat the thing they only see in TV commercials.

And they cannot take a profit loss. They have no ecosystem to have any shot of making it back. Development takes time and money and if they don't make it at the point of sale there goes the development money.
Is Apple making it tough on competitors? Sure. Is it "game over"? Not a chance.

The iPad2 is really only meeting the hardware specs of the Android devices coming out. And I fully expect that the Motorola Xoom price will drop within two months, probably bringing the wi-fi model very close to, if not equal to, $500. And that is for the 32 GB version (the least currently offered). Even at $600 (as quoted by Motorola execs), it matches the iPad price.

Sure, iPad has a huge lead in the tablet market. But don't expect it to have more than 50% market share in 18 months. This is definitely not "Game Over".
Of course dropping the price of the iPad v1, just screwed all of the sellers on EBAY trying to get $400+ for a used one.

Which actually makes me smile.
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Or get a refurbished
oncall 2nd Mar 2011
for $349.
Apple just have way too much advantage in this space than its competitors. Also noticed how they're bringing more and more of their great iLife suite to the iPad touch UI, setting the bar even higher for developers. How do competitors compete with that?
First it was the apps, now its price.
I thought I was done evangelizing free hardware and free software a long time ago.
Remember the days when Micro Center sold really cheap PCs with an Internet subscription.
Reminds me of the old days at HAL-PC.org

Anyway, you know its never game over.
Good things never last, and something new always comes along.
I know you said game and not series/tournament.
Ok, so Apple may have won today's game but Android will win the series/tournament.

Ok, here is the best part of my spiel.

There's more than one way to attack the competition.
Thinking outside the box, an Android next-gen Internet Cafe can blow away Apple in all aspects.

People want their hand held, they want to be shown cool stuff, they want to discover new things.
Like the discovery and ambiance of a super bookstore.
Apple is no Borders or B&N.
Most importantly, people want to customize their Android devices especially if they knew why.
What about price, well, a gadget-of-the-month club would take care of that.
(I have to give credit to Jeff Jarvis for the G-O-T-M club idea.)
LOL, take out a phone like you would borrow a library book.

There are thousands of ways to beat Apple.
This just in. Henry Ford has won the car wars with his newest Model T line, everyone else stop building cars.
Sorry but I don't see where its more capable than the original iPad. If anything they have taken a Xoom made it thinner crippled the OS and changed the name to iPad 2.
James,

I, for one, got what you mean in your ?Game over? comment. That is, for the foreseeable future. All Apple really did this time around is release what it needed to remain competitive. Like you, I?ve been using mobile tech since lugging around a 25 lb block back in the very early 90?s. I?m writing this message on my HP 2740p and have been using tablet PC?s as my primary work PC since ?05. I?ve been using handheld?s since my first Palm device in ?97. I have followed the market closely the entire time.

But in your comment about price, you really only touch a part of the equation. It?s not simply price of the hardware, but cost of ownership. Apple not only has a product that doesn?t require a carrier data plan at an additional cost, that plan is available on an ad hoc contract. I only have to pay for data if/when I needed it. That is very compelling. Also one must consider the cost of software. When I finally retired my Palm device and switched to a Touch, not only were most of my mission-critical applications ported to iOS, but many had either low- or no-cost upgrades. It wasn?t too heavy a cost burden to get all my beloved Palm apps on my Touch. That also meant that there was very little learning curve ? which for me, also translates into a cost. Actually, adding an iPad would not add anything to my cost of software, since I am allowed to have dual installs.

That?s not to say the Apple products are perfect. Far from it. Even at 64 GB, external storage would be useful for me. Digital ink capture would be a very important addition. Admittedly, I?m quite spoiled by being able to use both my finger and a Wacom pen on my tablet PC. And why, oh why, hasn?t MindManager been ported to iOS??? iTunes has an effect on me similar to my wife?s ?Antonio?s Red Eared Chili? recipe, named after my son. Still, the iPad does satisfy the 80/20 rule for requirements in project management.

In the last 6 months, my need for mobility/portability has dramatically increased. As powerful as my 2740 is, I?m finding there are too many times that I simply need other types of ultraportable capability that could be met with these types of tablets; particularly weight and battery life combined with cross-platform compatibility. I?ve been holding off, because the iPad just hasn?t been very compelling for me yet. However, the need has continued to increase. As much as I love to ?geek around,? I need something that will work out of the box. I need it to be highly cost effective. I need it available now. I have held off as long as possible to see what was coming from the competition, but that luxury is rapidly slipping away.

Android machines continue to be intriguing, but I?m spoiled by PalmOS, iOS, and yes, even Win7?s tablet capabilities. It?s intriguing, but not compelling. Certainly not compelling enough to re-invest the cost for applications. Besides, I trust Google even less than Apple. Lenovo, Asus and HP have some interesting devices, but all are crippled with Atom processors. HP?s Slate fits most criteria I require, but it simply lacks the horsepower and it?s availability is limited.
I had a lot of hope for HP?s WebOS device, but their announcement left me underwhelmed. Excellent piece of hardware, but no real idea of availability or pricing. Most important, HP didn?t address what they were doing to woo developers. Personally, my thermometer for the success of WebOS is whether or not they can get DataViz back in the fold. If they can convince them it?s worth it to produce Docs2Go for WebOS, then I think they have a real chance. iPad 3? Well rumors of that started before iPad 2 was even official. Sorry, I just don?t have the time to wait for it.

At the end of the day, the iPad 2 will satisfy at least 80% of my needs in a very cost effective manner. The competition cannot do this. Apple will win my business for this generation of hardware.

Frankly ? perhaps ironically ? the last time I saw this kind of platform domination was the Palm devices in the late 90?s through about 2004. Solid hardware, good software options, and an user experience that solved problems and made me more productive. Will Apple domination last? Of course not. As with all technologies I?ve seen in the 30 years of my professional experience, competition will gradually chip away. It will reach a critical point and then the lead will crumble quickly. How long that will take is anybody?s guess, but it?s a safe bet that it will be at least two hardware generations. For today, however, and quite a few today?s coming, we seem to be stuck with Apple.

Later,
Raul
iPad haters need to get a life. There's nothing like the iPad, even if it doesn't have a USB port.

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