Originally Posted by Carthusia
I don't think so; there's a good chance that the iPad mini will replace the iPad 2 at the $399 price point and that the iPad 2 may very well be discontinued this year. It's easier to see the iPad 2 being retired rather than bumping its processor specs-too much fragmentation at this point.
This is something that I had not considered...that an iPad mini w/ Retina Display could "replace" the iPad 2 at the price point.
So let's consider it. No way the iPad 2 gets a spec bump at this stage. Like you said, too much fragmentation. But they kept it last year for a reason. With the iPad 4 being a very small update over the iPad 3, they couldn't keep the iPad 3 around at $399....they'd lose money. There would have been nil margin on iPad 3 at $399, and people wouldn't see a dramatic difference between 3 & 4 and just opt for the cheaper 3. iPad 4 sales would have suffered more than they did with iPad 2 as the $399 option. Moral: More than enough performance differentiation for the $100 gap.
Meanwhile, the iPad mini came in at $329. 'Performance' wise, the only distinction between the mini & the 2 was screen size, and the newer cellular radios. Arguably, not quite $100 worth of difference. Therefore, not. Obviously there are other factors as to why the mini is $329 and not $299...but this is one Apple wouldn't overlook when deciding to keep the iPad 2 or not. The mini is good, and not quite "$100 worse than iPad 2", if that makes any sense.
So, Fast forward to this year where we have a major new iPad 5 to launch. Redesign, A7 64-bit, Touch ID. Same allure as iPhone 5S, and probably same insane crazy demand. This product is $499 and up. They now have to properly address their established $399 price point and ensure that it is appropriately "$100 worse" in perceived value. If they were to keep the iPad 2 at this point, I think they'd be too far behind, as iPad 2 would be perceived as at least "$150 worse" or more, and see as a bad purchase. So, does it stand then that maybe they could keep the iPad 4 at $399? Would there be the appropriate price distinction, and does it make sense for manufacturing & cost? Well, the iPad 4 has an A6X chip & Retina Display vs. iPad 5 with an A7 64-bit chip & Retina Display. iPad 4 is older/clunkier/heavier, iPad 5 is newer/sleeker/lighter. iPad 5 also has Touch ID, and the new colors, and minimal improvements to camera & wireless. Seems doable to me, but let's look at your idea...
Compare that to an iPad mini route. iPad 2 and 4 get discontinued on the same day and are no longer options. Apple introduces a new iPad mini 2 w/ A6X chip & Retina Display. Other minimal improvements to camera & wireless, probably along the same vein as iPad 5. But that's it. And then, without justifying it at all, RAISE the price of the mini by $70 (deal breaker for most) from $329 to $399.
Then after the boos die down, Apple says we're also keep the first generation iPad mini in our lineup, (and I'll give you this one), lowering price point to $299. Same mini as yesterday, lower price by $30.....All the while, the only significant differences between mini 1 & mini 2 are a chip and Retina Display. Compare this hypothetical event to the launch of iPad 3....and tell me how well that would have gone if Apple came out and said Yes iPad 3 has a Retina Display, and is now $100 more than iPad 2.
Understand there is big difference between lowering the price of an old model and keeping it around, and raising the price of the new model and keeping the old around at the same, or even lowering it. This is crazy erratic behavior.
The only time in recent memory that Apple has something like is with the release of the Retina MacBookPro's, but there are different factors at play there, and it hasn't turned out to have the impact Apple was hoping for (they sold less than they thought they would, because the prices increases over non-rMBP were seen as premiums & unrealistic).
Edited by pmz - 10/16/13 at 12:42pm