By Jim Karpen on Tue, 01/03/2012
There's buzz today on the blogs about the possibility of a $299 iPad this year. The speculation surrounds the multiple reports by Digitimes that Apple will introduce two new higher-resolution iPads — while also continuing to sell the current iPad at a lower price. After all, Apple has very successfully done this by continuing to sell the iPhone 4 and 3GS even as it introduced the iPhone 4S. If this scenario is true, Digitimes speculates that the iPad 2 might go for as little as $299. However, note that Digitimes not only has a mixed record of predicting what's to come, despite having sources in Apple's supply chain, but also the $299 price is pure speculation. You can read more on AppleInsider. The idea is that Apple may introduce a low-end model to compete with the Kindle Fire.
Speculation aside, it seems pretty certain that we'll see a new iPad in March or so, and that it will have a higher resolution retina display. But will Apple go as low as $299? I hope not. Apple has never gone after market share. Its goal, with Steve Jobs at the helm, was always to create high quality, beautifully designed, consumer friendly products — at a higher cost and with a comfortable profit margin. Market share was never an issue. Yet this vision has propelled Apple into being the most highly valued company in the world, one that's hugely profitible. Steve Jobs didn't care if the market share was only 3%. In fact, while Apple currently has below 10% of the computer market, it makes over 50% of the profit in the industry. Why compete on the low end, with its razor-thin margins? Apple has never done that with its computers, so why do that with their iPads?
It seems to me that a $299 iPad would only canibalize the more expensive iPads. Jobs was always averse to this sort of thing. He wanted to put the best out there, and not to have something second-best in its own line competing with its best products. Maybe it's a sensible shift in strategy to sell the iPhone 3GS for $1, which is its current price, because iPhone users are locked into a contract. But does the same logic apply to the iPad?
Of course, I'm playing devil's advocate. A low-cost iPad would be nice to see. But now that Steve Jobs is gone, one worries. One wants Apple to be the same Apple as when he was in charge. And it would make me nervious if Apple shifted to the same old corporate mentality of growing market share, whatever it takes.
In any case, it'll be interesting to see what happens. So far it looks as if the Kindle Fire, even though it sold well over the Christmas season, had little impact on iPad sales, which hit record levels during the holiday season. Some experts suggest that Apple sold perhaps 1-2 million fewer iPads because of the Kindle Fire. And Apple's view of the Fire is that it will simply bring more people into the tablet market, and that many of those will eventually upgrade to an iPad.