Originally Posted by AppleInsider
The shipments could imply that Apple is preparing for near-immediate availability of its third-generation iPad. That device is expected to be officially unveiled at a media event on March 7
Best Buy's iPad 2 sale comes soon after Meijer, a regional big-box retailer in the U.S., slashed the price of the 16GB iPad 2 with Wi-Fi by $70
. Retailers are believed to be clearing out inventory of the current iPad in anticipation of a new model debuting soon.[ View article on AppleInsider ]
Whatever the margins are or what Best Buy knows or thinks it knows, interesting that no one (I noted) has commented on the possible implications of Apple's "expanding the line" - as they have with keeping discounted models of the previous phone versions around.
Note: One reason Apple might not keep the iP 2 around as it's been doing with its phones could have to do with the different economics of contract phones vs. non-contract iDevices. That's above my economics grade to figure out - but it's been a great strategy on the phone side.
Partly brilliant because by designing/engineering/building right in the first place and updating via software designed also for the current model, their old models are still competitive with new Androids for
to "create" "new" lower-priced models! And that slashes the margins of competitors who bring out a dizzying array of models every few months - meaning those designs are also inherently more "slap-dash" - i.e., tossed together with less engineering and production love. Few other companies - at least those that are either selling in volume and/or making money in the mobile space - put a year into each new model iteration (nor in a lowest common denominator clone market can they).
A diamond is a joy forever. An Apple device is a joy for years. And most new Android devices are mixed blessings for but a few months before seeming dated by the next piece of plastic whose OS is unlikely to ever be updated.
If the target price of a "new old" iPad is $399 (only in 16GB/non-3G and possibly a bit of other economizing inside if that's feasible without much compromise) - with the "production experience (including original design and production ramp-up expenses)" long amortized, they can:
a) cut the entry price into the family by 25%
which will still blunt 10" price competitors without too much of that famous "cannibalization" of their own new base model iPad 3 (and so likely a net customer gain offsetting slightly lowered revenue/pad).
b) still make good $/unit even while cutting off the oxygen of competitors and
expanding the user base/unit market share.As for why not lower,
$399 is still not in Kindle Fire/Nook range - but closer enough to tip some fence-sitters hovering on the price/value/affordability sidelines. Whereas $299 wouldn't capture many more of these (and would nick Apple's net margins), and except for $49 itself, Apple seems to prefer prices ending in $99 rather a number like $349.
The situation would be different if Apple were really facing strong competition in the tablet market instead of closer to monopoly scrutiny. There's simply no pressure on Apple to market a loss leader
and while Apple's happy to sell you accessories, upgrades, software and content, they've never been a "give the razors away to sell blades" kind of company (which is
the Kindle Fire biz model).As for any possible tweener (e.g. the rumored 8") pad
- I don't see it at the announcement of the iP3 - if ever - but I still feel that leaving the entire 3.5"-9.7" screen size range unoccupied by any Apple product is a condition that Apple knows they must remedy eventually, as there are a number of niche markets and maybe some mass ones for which such sizes can be sold in profitable volumes.
And with iPod sales actually declining
, Apple will either reinvigorate the line in some manner - or start treating it as a limited-lifetime "legacy" business they may keep only one or two models in. This is pointed to by the lack of any real updating to the Touch last year. So if Apple doesn't want to either compromise the size of screen elements on the iPad line - or make developers write for a third resolution, a bigger (likely less "retinized") iPod Touch - with screen elements larger than the current ones on the touch and phone - remains at least a possibility. (As does a 3.8" iPhone close to the same overall dimensions of the current 3.5" model, hovering just around the 300 ppi line.)
Anyway if Best Buy's holding a fair amount of inventory, they'd rather move it at $449 (and clear out discontinued higher models) now than after a $399 version comes out.