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Analyst anticipates cheap iPad 2 instead of mini iPad

updated 11:05 am EST, Fri December 23, 2011

Wedge predicts iPad to follow iPhone strategy

Wedge Partners analyst Brian Blair doused investor expectations of a 7.85-inch mini iPad with an update on Friday. He believed Apple had been testing seven-inch tablets for "over a year," but he didn't expect Apple to release one of the kind in 2012. While not claiming inside knowledge, he instead reckoned that Apple would follow the iPhone strategy of preserving an older model and keep the iPad 2 on the market, just at a lower price.

"We believe iPad 2′s price could drop to the $349 to $399 range with Apple offering a single 16GB model," Blair said.

The cheaper model would be used to catch those in the "mid-tier," or tablets between $249 and $499. It would help mute demand for both discounted full-size Android tablets as well as the Nook Tablet and others that skirt the edge of the mid-range category.

Apple had the price advantage over comparable rival tablets for all of 2010 and much of 2011, with many either costing as much or only slightly less for similar features or else having prices that were actually higher than an equivalent iPad, such as the HTC Jetstream's $850 price or the initial $800 cost of the 3G Motorola Xoom. Pricing for many tablets might be more competitive in 2012, however, and Apple may want to close as much of the price gap with the $199 Amazon Kindle Fire as possible.

The rumored 7.85-inch iPad might not show until later in the year but would be a more direct hedge against Amazon and Barnes & Noble. Late Apple CEO Steve famously savaged small tablets, saying they were too small to fully realize the software and create enough of a difference over a smartphone.




by MacNN Staff

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Comments

  1. Paul Huang

    Joined: Dec 1969

    +1

    old model continues at $50 off

    And the new model takes over the same price tiers at 2x the resolution. Simple solution and no confusion.

    No need to reduce the price much, because Amazon.com's Fire is not just burning the green trash cans' A55E5, but also its own.

    Comment buried. Show
  1. Arne_Saknussemm

    Joined: Dec 1969

    -14

    Discounts intead of Innovation...

    Sounds just a tad decadent.

  1. climacs

    Joined: Dec 1969

    +3

    don't let facts keep you from

    posting the opposite of the truth, Arne the Android leg-humper.

  1. SockRolid

    Joined: Dec 1969

    +1

    No need for a 7" iPad. Ever.

    Re: "We believe iPad 2's price could drop to the $349 to $399 range with Apple offering a single 16GB model," Blair said.

    Bingo. No need to ever build an all-new 7" iPad mini. Selling last year's model for $100-$150 less than the current model is all Apple needs to do to dominate the mid-range of the pad computing market. If they wanted to go for the low-end, they could sell the 2-year old iPad for $200 less than the current model. Exactly like they do with the iPhone line.

    Can Apple do this profitably? Yes. Because amortizing the development costs and factory equipment over an extra year of production will lower the per-unit costs, keeping margins up even at a lower price. Imagine a 10" iPad 1 for the same price as a 7" Kindle Fire. Apple could do that if they wanted to.

  1. iphonerulez

    Joined: Dec 1969

    +1

    The media always want to

    make it seem as though Apple is losing huge amounts of sales to the Kindle Fire, but I feel certain that is just an assumption or an outright lie. I doubt anyone considering an iPad will settle for a Kindle Fire and those who are buying Kindle Fires never considered buying an iPad. If Apple dropped the iPad 2's cost $100, it would boost sales tremendously buy those who really couldn't easily manage to buy an iPad but really wanted one. A $399 iPad would probably attract 80% of consumers wanting a high-quality tablet and practically stifle sales of Android-based tablets. Apple needs to crush all Android tablet sales to shut up the lying media that think and Android device is the savior of consumers to allow them to buy low-priced junk.

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