20% of non-iPad buyers would consider a $399 entry-level iPad 2

Posted:
in iPad edited January 2014


With Apple expected to introduce its third-generation iPad next week, a survey of consumers not planning to buy an iPad shows that 20 percent would change their minds and buy an iPad 2 if Apple continues to sell last year's model for $100 less.



RBC Capital Markets conducted a survey of 1,100 consumers at the end of 2011 about their tablet buying plans. Among those who indicated they were not planning to buy an iPad 2 in the next 90 days, 20 percent indicated they would be "likely" to buy Apple's second-generation tablet if it were sold for $399 and up.



Apple's entry-level 16-gigabyte Wi-Fi-only iPad 2 currently costs $499, but there have been suggestions that Apple could continue to offer its second-generation model at a reduced price after a so-called "iPad 3" becomes available. The company already employs this approach with its iPhone lineup, as the latest-generation iPhone 4S is sold alongside the iPhone 4, first released in 2010, and the iPhone 3GS, which debuted in 2009.



Analyst Mike Abramsky with RBC said in a note to investors on Wednesday that if Apple were to continue to sell the iPad 2 at a reduced price, it could allow the company to not only expand its addressable market, but also head off lower-priced competitors like the $199 Amazon Kindle Fire.



Abramsky believes Apple's next iPad will include a quad-core "A6" processor, along with 4G long-term evolution high-speed data connectivity and a high-resolution Retina Display. He assumes that the next iPad will be on sale soon enough for it to have an effect on Apple's current fiscal quarter, which concludes at the end of March.



The next iPad is also expected by Abramsky to offer a glimpse of what Apple plans to include in its sixth-generation iPhone, expected to debut later this year.











"Like the iPad 3, iPhone 5 may include a quad-core A6 processor and LTE," he wrote. "Despite the success of the iPhone 4S, we believe these features along with a possible larger screen may drive a significant iPhone 5 upgrade cycle."



Apple on Tuesday officially announced next week's media event where it is expected to unveil its third-generation iPad. AppleInsider will have full, live coverage when the keynote kicks off at 10 a.m. Pacific, 1 p.m. Eastern on Wednesday, March 7.



[ View article on AppleInsider ]

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Comments

  • blastdoorblastdoor Posts: 1,284member
    One way to experiment with lower iPad prices might be to start with an iPad2-based model aimed at the education market. Maybe sell a 16GB wifi version with no camera (the education market might actually prefer a model without a camera --- what school wants to deal with the controversies that could develop with kids and school-provided cameras?). Maybe sell it to the education market (schools and teachers) for $349. Then later open it up to everyone for $399.
  • solipsismxsolipsismx Posts: 19,566member
    I think a $399 16GB WiFi-only iPad 2 is very likely.



    In related news: Apple will sell 100% of all iPad 3s it can make.
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by Blastdoor View Post


    One way to experiment with lower iPad prices might be to start with an iPad2-based model aimed at the education market. Maybe sell a 16GB wifi version with no camera (the education market might actually prefer a model without a camera --- what school wants to deal with the controversies that could develop with kids and school-provided cameras?). Maybe sell it to the education market (schools and teachers) for $349. Then later open it up to everyone for $399.



    Removing the camera isn't really necessary. Apple offers the iPhone Configuration Utility (for OS X and Windows) that will easily lock down any HW, apps, and/or features one doesn't want used. In fact, even parents who are reading this thread but also who want more options than what Parental Controls offer can use this free app to lock down iDevices.
  • realitycheck69realitycheck69 Posts: 83member
    I'd like to know what percentage of people they surveyed were planning to purchase an iPad3.



    How long will it be until apple finally starts differentiating iOS products beyond simple storage increases?
  • digitalclipsdigitalclips Posts: 15,559member
    Quote:
    Originally Posted by SolipsismX View Post


    I think a $399 16GB WiFi-only iPad 2 is very likely.



    I half expect that in Education if not even lower prices for bulk, not sure Apple would do it for general public. We shall soon see though ... exciting times
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by digitalclips View Post


    I half expect that in Education if not even lower prices for bulk, not sure Apple would do it for general public. We shall soon see though ... exciting times



    I could see an Education-only 16GB WiFi-only iPad 2 for less money in lots of 50 or 100 for $349.
  • redpillredpill Posts: 11member
    Meh, those "20%" are the same buyers who keep Acer, and companies like it, in business.
  • mdriftmeyermdriftmeyer Posts: 6,900member
    BFD. Apple doesn't want to own the entry market of disposable goods.
  • mdriftmeyermdriftmeyer Posts: 6,900member
    Quote:
    Originally Posted by digitalclips View Post


    I half expect that in Education if not even lower prices for bulk, not sure Apple would do it for general public. We shall soon see though ... exciting times



    Apple's already helping the Education market tremendously with this Books initiative which will save school districts millions.
  • SpamSandwichSpamSandwich Posts: 24,921member
    Quote:
    Originally Posted by RedPill View Post


    Meh, those "20%" are the same buyers who keep Acer, and companies like it, in business.



    Very possibly. Chasing the low end is what got Acer, HP and Dell in trouble. Apple makes aspirational products, not commoditized crap.
  • friedlobsterfriedlobster Posts: 386member
    $399 entry-level iPad 2, Free iPhone 4, $99 iPhone 4S



    TOTAL WORLD DOMINATION
  • paxmanpaxman Posts: 4,164member
    Quote:
    Originally Posted by FriedLobster View Post


    $399 entry-level iPad 2, Free iPhone 4, $99 iPhone 4S



    TOTAL WORLD DOMINATION




    There, fixed that for you...



    Back to the thread....



    Useless statistic. What people say they will do is always very different from what they do do. Ask me if I will upgrade my iMac this year and I am sure to tell you yes... that is my wish and intention and definitely my need. But ask me again at year's end if I did and you will in all likelihood get a different answer.
  • mstonemstone Posts: 11,510member
    Quote:
    Originally Posted by SolipsismX View Post


    I could see an Education-only 16GB WiFi-only iPad 2 for less money in lots of 50 or 100 for $349.





    16 GB is way too small for education since iBooks textbooks are running into dozens of gigs for each subject. They need more like a 64 GB to be usable with iBooks Author files.
  • macvictamacvicta Posts: 346member
    Quote:
    Originally Posted by SpamSandwich View Post


    Very possibly. Chasing the low end is what got Acer, HP and Dell in trouble. Apple makes aspirational products, not commoditized crap.



    A $399 iPad 2 is commoditized crap? You guys sound like such snobs.



    How many of you were on here espousing the virtues of an unsubsidized iPhone a couple years ago? "An iPhone for $199? Go buy a Motorola, you peons."
  • misamisa Posts: 700member
    Quote:
    Originally Posted by SpamSandwich View Post


    Very possibly. Chasing the low end is what got Acer, HP and Dell in trouble. Apple makes aspirational products, not commoditized crap.



    It's funny listening to business analysts who think Apple should accept lower margins and just dominate the market with "Cheap disposable crap."



    I think people forget that Apple wants to sell innovative good products. Ask anyone what they want for their birthday or Christmas. They want an iPhone or iPad. Emphasis "want", I may want a pony too but I'm don't have a property for one



    The resale market for iPads and iPhones are huge, not that different from the Toyota Prius actually (3 year old pre-owned ones are nearly the same prices as a new current model.) You can't say the same about most other models. What will happen is that 3 months after the release of the iPad3 is that all the pre-owned iPad1 and iPad2 inventory will be gone till the next release.
  • cy_starkmancy_starkman Posts: 488member
    Quote:
    Originally Posted by mdriftmeyer View Post


    BFD. Apple doesn't want to own the entry market of disposable goods.



    iPod nano?



    I am going to go out on a limb and say that Apple is going to continue the iPad2 but at $299 with only 2 models, lower storage, wifi and a 3G version.



    Since we all saying stuff.
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by mstone View Post


    16 GB is way too small for education since iBooks textbooks are running into dozens of gigs for each subject. They need more like a 64 GB to be usable with iBooks Author files.



    They are far smaller than that. Here is the breakdown for the 10 textbooks on iBookstore:
    • 929 MB

    • 934 MB

    • 970 MB



    • 1.11 GB

    • 1.22 GB

    • 1.26 GB

    • 1.50 GB



    • 2.31 GB

    • 2.35 GB

    • 2.79 GB

    That's there under 1GB, six that are under 1.5GB, and 3 that are 2 to 3GB. The ones that are over 2GB are al from Pearson with the same subjects by McGraw-Hill being about half the size.



    Even at 3GB per book that means you can 4 large textbook subjects on a 16GB iPad per semester which should be more than sufficient for the nascent digital textbook market. To wit there are not too many offerings at this point and even as this market grows there will be plenty of classes that simply won't be candidates for large textbooks.



    Literature typically involves several small books that contain only text from various authors and other classes will not be candidates for a long time or at all. By the time this grows to something more excessive (say in two years) 32GB will very likely be standard for an entry level iPad.



    Now an 8GB WiFi-only iPad for the HS education market or trying to get a full course load of college textbooks on a 16GB iPad would be an issue.
  • mknoppmknopp Posts: 257member
    Quote:
    Originally Posted by cy_starkman View Post


    iPod nano?



    I am going to go out on a limb and say that Apple is going to continue the iPad2 but at $299 with only 2 models, lower storage, wifi and a 3G version.



    Since we all saying stuff.



    I would love to see this. And from the iSuppli teardown done a year ago and adjusting for normal cost decreases in component prices over time, Apple could still make a modest profit margin of about 18% on this. (My own calculations on this.)



    Along with this, I would like to see them release an iPad 2S with a non-retina display (using this screen with the still selling iPad 2 should keep prices down due to quantity bought) and A5X processor (which I think will also be installed in the new Apple TV and possibly a new mid-range iPhone 5 to address emerging markets) starting at $399.



    Then sell the iPad 3 with retina display and A6 processor starting at the normal $499.



    None of these would be "commoditized crap" unless of course one currently considers the iPad 2 to be "commoditized crap" because it would be exactly what Apple is selling now, or slightly better.



    This would also put the maximum amount of pain and pressure on the competition. Tim Cook stated about a year ago that he was not going to surrender any market segment. Soon after Apple kept the iPhone 3Gs on at $0 with contract in the mobile phone market. Since Apple doesn't really have the iPad 1 still in production I could see them building a mid range iPad model to bring the iPad into line with their current pricing scheme used for the iPhone and thus not really surrendering any market segment.



    At least that is my hope.
  • solipsismxsolipsismx Posts: 19,566member
    Quote:
    Originally Posted by mknopp View Post


    I would love to see this. And from the iSuppli teardown done a year ago and adjusting for normal cost decreases in component prices over time, Apple could still make a modest profit margin of about 18% on this. (My own calculations on this.)



    Along with this, I would like to see them release an iPad 2S with a non-retina display (using this screen with the still selling iPad 2 should keep prices down due to quantity bought) and A5X processor (which I think will also be installed in the new Apple TV and possibly a new mid-range iPhone 5 to address emerging markets) starting at $399.



    Then sell the iPad 3 with retina display and A6 processor starting at the normal $499.



    None of these would be "commoditized crap" unless of course one currently considers the iPad 2 to be "commoditized crap" because it would be exactly what Apple is selling now, or slightly better.



    This would also put the maximum amount of pain and pressure on the competition. Tim Cook stated about a year ago that he was not going to surrender any market segment. Soon after Apple kept the iPhone 3Gs on at $0 with contract in the mobile phone market. Since Apple doesn't really have the iPad 1 still in production I could see them building a mid range iPad model to bring the iPad into line with their current pricing scheme used for the iPhone and thus not really surrendering any market segment.



    At least that is my hope.



    18% profit margin? Not only is that halfing the profit margin it's almost getting 1/4 of the profit.



    While you want that as a customer you need to look at this from Apple's PoV as a seller. They have no competition. They have no loss of sales. There is no reason for them to make less profit in the tablet market. Yes, I mean less because if you're selling as many as you can make selling them with cheaper won't increase unit sales.
  • mknoppmknopp Posts: 257member
    Quote:
    Originally Posted by SolipsismX View Post


    They are far smaller than that. Here is the breakdown for the 10 textbooks on iBookstore:
    • 929 MB

    • 934 MB

    • 970 MB



    • 1.11 GB

    • 1.22 GB

    • 1.26 GB

    • 1.50 GB



    • 2.31 GB

    • 2.35 GB

    • 2.79 GB

    That's there under 1GB, six that are under 1.5GB, and 3 that are 2 to 3GB. The ones that are over 2GB are al from Pearson with the same subjects by McGraw-Hill being about half the size.



    Even at 3GB per book that means you can 4 large textbook subjects on a 16GB iPad per semester which should be more than sufficient for the nascent digital textbook market. To wit there are not too many offerings at this point and even as this market grows there will be plenty of classes that simply won't be candidates for large textbooks.



    Literature typically involves several small books that contain only text from various authors and other classes will not be candidates for a long time or at all. By the time this grows to something more excessive (say in two years) 32GB will very likely be standard for an entry level iPad.



    Now an 8GB WiFi-only iPad for the HS education market or trying to get a full course load of college textbooks on a 16GB iPad would be an issue.



    I am sorry, but I have to disagree about 4 large textbooks being enough. The schools that I am familiar with that have moved to digital textbooks and the ones that are seriously looking into it are, or have, all moved from dead-tree textbooks to digital. Thus, four classes worth of textbooks isn't enough. You would need at least 8 classes worth (a typical school course load) and then add apps and other desirable things to the books storage required.



    It is for this reason that I could easily see Apple upping the storage from the now standard, 16, 32, 64 GB to 32, 64, 128 GB. Besides, the sizes of the books are only going to go up as publishers and authors figure out how to better incorporate 3D and Hi-Def video that takes advantage of the Retina display.



    Speaking of which, the Retina Display and the talk of moving to 1080p video is another reason that I see Apple moving towards higher storage amounts, not smaller. Higher res requires more space to store. It is also a good way for Apple to differentiate itself from its competition.
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