Rumored three iPad model lineup could cut entry price to $299
Despite having its report on Apple planning to triple its iPad lineup this year firmly rebuffed by many onlookers, Taiwan-based tech site DigiTimes today reiterated that assessment, also claiming that the change could bring big price cuts at the low end.
In a research report issued earlier today, the site once again asserted that Apple plans to expand its lineup of iPads by adding models that serve the "high-end segment" and "the midrange," while continuing to offer the iPad 2.
"With the existing iPad 2, the Apple tablet series may cover all price segments--from entry-level to high-end. Apple's pricing strategy for its iPad series is crucial to the tablet market. It remains to be seen at what price level Apple will set its entry-level iPad. For Wi-Fi-only models, U.S. $299, U.S. $349 or U.S. $399 may all be possible," the outlet said.
A $299 iPad has been available before, but there were caveats galore. It was Apple's first-generation device, and it only sold at fire sale prices through third-party carrier stores following the introduction of Apple's second-generation model.
Since then, competitors have emerged, including Amazon.com and its Kindle Fire, which made waves near the end of last year, selling for $199. While not sporting as big of a display, and missing a handful of hardware features found on the iPad, it sells for less than half the price of Apple's current entry-level iPad, with reports pegging sales at 1 million units a week during December.
Apple has maintained the same pricing structure since the introduction of the iPad in 2010, offering Wi-Fi and Wi-Fi + 3G models of the tablet at different pricing tiers for its 16GB, 32GB, and 64GB models. The entry-level 16GB model with Wi-Fi starts at $499, with each additional tier of storage, plus optional 3G networking, tacking on costs scaling up to $829.
One important consideration is the cost of producing the iPad. A teardown of the iPad 2 by IHS-owned iSupply last year estimated the total cost of Apple's two 32GB models to start at $326.60, with manufacturing costs pushing that total north of $333. iSuppli lists the LCD screen as the most expensive part of the tablet, at $127. Costs could have certainly come down between then and now, but Apple is expected to be utilizing panels with considerably higher pixel density in the next iPad, something that does not come cheap.
Apple has been known to make considerable price cuts on its products, though such moves have been few and far between. The shortlist includes the $200 price cut on the original iPhone, a move that came a little more than two months after its introduction and infuriated early buyers, leading to Apple offering iTunes gift cards as an apology. There was also the $500 price cut on the solid-state version of its first-generation MacBook Air.
The suggested iPad price cut comes alongside price reductions on two high-profile tablets in recent days, with Sony knocking $100 off the price of its S series tablet over the weekend, and Research In Motion dropping the price of its entire line of PlayBook tablets to $299, down from its $499 starting point.