Ever since rumors of a new iPad surfaced last year, speculation has grown that Apple will continue to sell the iPad 2 at a reduced price, knocking $100 off the $499 price for the WiFI-only version, according to some reports.
Now the Taiwanese site Digitimes reports Apple will indeed continue the iPad 2 line, but confine it to a new 8GB model. The current iPad 2 is available in three models with 16-, 32- and 64GB of storage at $499, $599 and $699 respectively or more if cellular 3G connectivity is included.
A lower cost, 8GB iPad 2 makes sense to analyst Roger Kay who says it fits with Apple’s past practice of making sure its value model is not quite desirable so most consumers will get the newer, more expensive model.
From a value point of view, Kay notes that even with the advent of cloud services, 8GB isn’t a lot of storage. “For example, video takes up a huge amount of space, so if all you’re doing is streaming that's fine, but if you’re going to be storing video, that 8 gigs is going to go fast,” said Kay, who heads the consulting firm Endpoint Technologies Associates.
Digitimes, which interviews and tracks supply chain companies that supply components to Apple and other tech vendors, says the move is to head off expected competition from a range of Windows 8 tablets expected to roll out later this year. But Apple’s more immediate competitor is Amazon’s $199, 7-inch Kindle Fire that has leaped to the number two position, albeit well behind Apple, in tablet market share since its introduction last November.
Analyst Kay thinks Apple isn't likely to go any lower than $399 on the iPad 2 regardless of competition. "I don't think Apple wants to establish many new low end price points," he said. "And if you've noticed, they haven't exactly been lacking demand."
Apple hasn’t confirmed anything about what it will show at next week’s event. Digitimes says its sources expect Apple to bring out iPad 3 models with 16- and 32GB of storage respectively. Among other new features, the new iPad is rumored to include a much higher resolution display than the current model.