Friday, March 9, 2012

Today"s $399 iPad 2 May Be Next Year's $299 iPad 2

The iPad 2 coming in at $399 after the introduction of this year's new iPad with it's Retina Display and awesome new features came as no surprise.  At this point, the $399 iPad 2 is going to have a huge impact on the sales of tablets priced between $299 and $399.  Unless you're stuck in time, $100 isn't that big of a deal as it was even when the original iPad came out in 2010 or even ten years ago.  

Now, consider this.  Suppose Apple keeps the iPad 2 around for another year next year's 2013 iPad comes out and the current iPad goes down to the $399 price now occupy by the iPad 2.  that could mean the iPad 2 could potentially drop as to as low as $299.  

Don't think it'll happen. The iPhone 3GS has been around since 2009 and continues to be a hot seller, this is a full two years after two new iPhones has been on the market.  So, there is precedent for Apple to keep products around just to capture lost sales while still maintaining its profit margin.

The iPhone 3GS has been around since 2009, even after two iPhone update cycles.  And it remains a popular device that allowed Apple's iPhones to rout other devices on AT&T in terms of smartphone sales.  

Even compared to the 2012 iPad, the iPad 2 is no slouch.  Seriously, dominated the last Christmas quarter even with Amazon's Kindle Fire trying to put a dent in Apple's tablet dominance to no avail.  On top of that, there is evidence that the iPad 2 is routing the Fire this quarter as  companies like Texas Instruments that sell components that goes into the Fire warned on their finances.  

Another thing.  Apple may keep the iPad 2 around for just the schools and dominate education.  Wouldn't that be something.  Apple's margins for a $299 could be protected by profits from textbook and accessory sales.  

What do you think? Makes a lot of sense, me thinks.

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