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Apple predicted to phase out iPad 2 to streamline product line for 'iPad mini'

post #1 of 19
Thread Starter 
Apple is bucking industry trends and outperforming its peers by creating its own growth through hardware and software innovation ? an aggressive strategy that one analyst believes could lead to Apple phasing out the $400 iPad 2.

Rob Cihra with Evercore Partners said in a note to investors this week that he sees Apple phasing out the current iPad 2, because Apple's overall vision calls for "clearer product tiers." The prediction comes as Apple is expected to lower the barrier to entry of its iPad lineup by unveiling a new, smaller iPad next Tuesday.

Cihra believes Apple will sell around 7 million so-called "iPad mini" units in the December quarter. Along with the full-size iPad, he sees Apple selling a total of 26 million units in the holiday shopping season.

Evercore


In his view, Apple is leveraging its engineering expertise in both hardware and software to "pull dollars away from otherwise commodity markets and incumbent competitors." Apple's calendar year 2012 revenues are up 30 percent year over year, while the broader PC market has dropped 4 percent this year.

Further bolstered by sales of 49 million iPhones, Apple is expected by Cihra to post $56.1 billion in revenue during the December quarter, amounting to $16.33 in earnings per share.

Prior to that anticipated blockbuster quarter, Apple will report results for its just-concluded September quarter. For that three-month frame, Cihra believes Apple sold 27 million iPhones, 17 million iPads, 4.9 million Macs and 5.7 million iPods, resulting in revenue of $36.5 billion and earnings per share of $9.03.

His numbers are slightly above Wall Street consensus for the September quarter, as other analysts on average seek $36.4 billion in revenue and $8.93 earnings per share.

Evercore Partners has reiterated its overweight rating for AAPL stock, as well as a target price of $800.
post #2 of 19
I think 7M smaller iPads is low, 49M iPhones is high and if phasing out the iPad2 could signal the smaller iPad to be $400-ish.
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post #3 of 19
@philboogie I agree that 7 million iPad Minis is on the low side. Probably closer to 10 million. However 49 million sounds about right. As long as they can get supply higher. 37 million iPhones sold last holiday quarter, and demand for the 5 is greater. I think pricing will be $249-599. That would be perfect.
post #4 of 19

That would make complete sense. It's obvious that the reduced price iPad 2 was just there to extend into a lower price point and with the iPad Mini on its way, there's really no need to keep it around. A starting point for an iPad Mini at around $249 (still speculation at this point) and extending into the lower range of the full-sized iPad will fit perfectly and offer a nice range of choices. At the same time, it will make people question buying a $200 Fire (or other cheapo Android tablet) when for only a little bit more, they can get the real thing.
 

post #5 of 19
Phasing out of the iPad 2 is surely on the cards, so I'm not sure it's news to report the one analyst who simply stated the obvious. It would only confuse buyers -- not Apple's style. They might keep it until Xmas, but I'd be surprised.
post #6 of 19
Gee, this analyst must have read my post here over a month ago (when the iPad mini rumors started) that the iPad mini would replace the iPad 2 and that Apple continued the iPad 2 simply as a stop-gap until the mini was ready. Maybe I should get a cut of his paycheck for this particular analysis. :D
post #7 of 19
Quote:
Originally Posted by MattBookAir View Post

Phasing out of the iPad 2 is surely on the cards, so I'm not sure it's news to report the one analyst who simply stated the obvious. It would only confuse buyers -- not Apple's style. They might keep it until Xmas, but I'd be surprised.

Or they keep the iPad 2 in the game until the iPad 4th gen comes out and just don't drop the iPad 3rd gen down a tier. Or keep it but only for corp and education institution sales where there is a bulk buy. Say like 30 units minimum.

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post #8 of 19

This article reminds me to drop Tim C a note suggesting they keep the 4S form factor just update to LTE and new plug if they must.

4S is a rock  (over a year of use, no scratchs/dings and no case) and perfect size for me. Seen the new 5... not crazy about the form factor compared to 4S. Just my point of view.

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post #9 of 19
It is ridiculous that this guy is getting press because he stated what everyone else has expected to happen. He probably read it on some blog and decided to include it in his report. This will surely be picked up by your local news tv station, which is sure to carry anything about Apple with the obligatory "sources say"...so they are not on the hook.

This will be followed by an analyst guessing at a price point and that will be deemed newsworthy too, I suppose. I have been saying for quite some time that $349 is the magical price point for Apple when it comes to the iPad Mini.

Goodbye iPad 2. We don't need an analyst to tell us your time has passed.
post #10 of 19
Agreed. Phasing out the iPad 2 hardly took a brain to come up with that.
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #11 of 19
Ipad2 is dead. iPad mini will replace it. I'll even stick my neck out and say $349.

If it uses some crazy new tech for the screen and is powered by the A6 processor, then it will be $399 and up.
post #12 of 19
Quote:
Originally Posted by Ireland View Post

Agreed. Phasing out the iPad 2 hardly took a brain to come up with that.

Perhaps the iPad 2 stays around until iPad 4 comes out, at which time the New iPad (3) will be sold at a reduced price. It is good to have a full size iPad selling at a reduced price to make it more affordable to the education market. The full size model I think is better for textbook reading.

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post #13 of 19

Here is what I THINK Apple will do.  If the iPad 2 is selling well enough, they might just keep on the price list as a lower cost 9.7 inch tablet. And then have the iPad 3 as the flagship tablet until they release the replacement for the iPad 3.

 

The iPad mini will be the flagship iPad mini and then when the iPad mini 2 comes out in a year from now, do the same thing.  Basically as long as the units sell well enough keep on the price list for about a year and always have two models one being the lower cost model for people on a budget and then the flagship models and then every year do a refresh and revamp their pricing.  Basically the same thing as what they are doing with the iPhone products.

 

That way they have something for the budget conscious customer and something for those that can afford the better performing products sold at a premium.

post #14 of 19
I think this makes sense. The 2013 iPad will be called the new iPad just like the 2012 model. The iPad Mini can be the way they use last year's parts. It will be disappointing if they put the entry price for the 10" model up by $100 though. The iPad 2 at $399 is a good buy. I wouldn't feel the same way about an iPad Mini at $399.
post #15 of 19
Quote:
Originally Posted by drblank View Post

Here is what I THINK Apple will do.  If the iPad 2 is selling well enough, they might just keep on the price list as a lower cost 9.7 inch tablet. And then have the iPad 3 as the flagship tablet until they release the replacement for the iPad 3.

 

The iPad mini will be the flagship iPad mini and then when the iPad mini 2 comes out in a year from now, do the same thing.  Basically as long as the units sell well enough keep on the price list for about a year and always have two models one being the lower cost model for people on a budget and then the flagship models and then every year do a refresh and revamp their pricing.  Basically the same thing as what they are doing with the iPhone products.

 

That way they have something for the budget conscious customer and something for those that can afford the better performing products sold at a premium.

 

I just don't see Apple doing anything that convoluted, even if it did bring a few extra bucks. They dropped the numbering from the iPad line for a reason. If they were planning what you are saying, they would have kept the numbering going. Otherwise how would you distinquish the different models which are on sale all at the same time? There are enough people (who don't follow Apple on a daily basis) who are confused enough by the whole iPad -> iPad 2 -> new iPad lineage. How are they going to market/sell two different things called just "iPad", one with old tech and one with new tech, if they don't number them? Will they market last year's model as "the old iPad"? The day they announced the current iPad and it was known that it had no number after the name, it should have also been pretty obvious that the strategy of using last year's iPad as the current low-end iPad was going to go away. If they planned on comtinuing that, they would have kept the number.
post #16 of 19
Quote:
Originally Posted by Wiggin View Post

The day they announced the current iPad and it was known that it had no number after the name, it should have also been pretty obvious that the strategy of using last year's iPad as the current low-end iPad was going to go away. If they planned on comtinuing that, they would have kept the number.

Actually I hope they will continue to offer the previous iPads each refresh and use them as an education discount model. Black WiFi 16 GB as the only version.

 

Another possible reason for removing the numbering was simply because of the upcoming iPad mini.

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post #17 of 19
$299 starting with a 16Gb and up. Would be very surprised if they release a 8Gb for less.
post #18 of 19
Quote:
Originally Posted by NuMoo View Post

$299 starting with a 16Gb and up. Would be very surprised if they release a 8Gb for less.

An 8GB model was in the leaked inventory list. Plus, Apple sells an 8GB iPhone 4. If people use the iPad Mini the same way they use the iPhone 4, 8GB would be fine and it might be the only way they can get the price down to $249.

This is going to be the big hit at Christmas time and the budget shoppers are a big market. While some apps are 1GB, most aren't.

Say you have 7.5GB free when you get it.
AAC music is about 5MB per track, photos are about 500KB each, data apps are under 20MB, games usually around 200-300MB but it can be 1GB, books are say 5MB, movies are bigger at 1-1.5GB but TV shows are around 200MB.

In this 7.5GB, you could fit:

50 data apps = 1GB
4 games = 1GB
2000 photos = 1GB
500 songs = 2.5GB
50 books = 250MB
1 movie = 1GB
4 TV shows = 800MB

The combinations of things will vary a lot from person to person. Someone might listen to music on their iPod so they get the 2.5GB for games or movies. While 8GB seems like a small amount these days, it's perfectly usable for a lot of people, especially young kids who will be a big target for the iPad Mini over Christmas.
post #19 of 19
Quote:
Originally Posted by Rob55 View Post

That would make complete sense. It's obvious that the reduced price iPad 2 was just there to extend into a lower price point and with the iPad Mini on its way, there's really no need to keep it around. A starting point for an iPad Mini at around $249 (still speculation at this point) and extending into the lower range of the full-sized iPad will fit perfectly and offer a nice range of choices. At the same time, it will make people question buying a $200 Fire (or other cheapo Android tablet) when for only a little bit more, they can get the real thing.

 

Makes complete sense to me too, totally agree with you on all points.
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