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Summary:

Some believe Apple’s next iPad launch could lead to a three-tiered pricing strategy aimed at making the iPad appealing to a much broader cross-section of consumers. So is Apple’s next tablet move really designed to lock up the market from top to bottom?

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Apple’s next iPad could come in two flavors and be offered alongside the existing iPad 2, according to supply chain sources speaking to DigiTimes. The Taiwan-based publication believes this could lead to a three-tiered pricing strategy aimed at making the iPad appealing to a much broader cross-section of consumers. So is Apple’s next tablet move designed to lock up the market from top to bottom?

The how and why of pricing

DigiTimes published its interpretation of the chatter it’s hearing on Tuesday, suggesting we could see a Wi-Fi iPad 2 starting at $299, then a mid-tier iPad 3 with beefier specs including an A6 processor but the same resolution display as the iPad 2 starting at $399, and finally a high-end iPad 3 with the A6 and a 2048×1536 high-res display starting at $499. The idea that what separates the two iPad 3 models is the presence of a Retina Display makes sense, since other supposed differentiators provided in the past (slightly different camera sensors) didn’t seem to justify the price difference from a consumer perspective.

Not without precedent

Having three versions of the iPad available at once seems like a bit of a leap from the current sales model, which simply offers different connectivity and storage options for one device, but it’s not like Apple hasn’t done this before. The iPhone, for instance, now offers three distinct models: the 3GS, the iPhone 4 and the iPhone 4S. The iPhone 4 and the 4S resemble each other closely but are separated by $100 in terms of entry-level pricing for new models, just as DigiTimes anticipates the two tiers of iPad 3 to be.

Overlap and confusion

The issue is that with the iPhone, the 4S came along as a successor to the 4 and when the older model remained on the market, Apple essentially clipped its wings by offering only 8 GB of onboard storage. Introducing two new devices at once and keeping an existing model, presumably with different connectivity and storage configurations, as DigiTimes suggests, would result in a lot of overlap of pricing and generate confusion for customers. Apple has traditionally eschewed overly complicated product offerings in favor of a simplicity that helps focus customer buying decisions.

Three is unnecessary, but two is smart

Despite this new report, it makes the most sense for Apple to focus on two devices in light of the above considerations. Covering the pricing gap with an iPad 2 starting at $299, then ranging up based on configuration options and offering the iPad 3 at $499 makes the most sense if Apple really does want to attack the low-cost market while also giving its next-gen tablet the best chance to repeat the success of its predecessor.

  1. Technology & innovations should help the society. For Apple’s or Facebook’s case it is not so…only diverse rate increased…

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  2. When ipad2 came out isupply posted a parts breakdown of $350. which doesnt include r&d, marketing cost. warranty and support. components cost continue to drop but how is apple going to sell things at a loss

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    1. isupply was way off, it costs less that $80 a piece to manufacture the ipads

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  3. I just got my iPhone 4s and I am totally blown away by siri and btw i just won the iphone :)) from here if I remember correctly, getappleproductsforfree(.)com/

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  4. I’ll pay a fair bit for an iPad, or any tablet, that will play the continuous client role. Even better if I can use it as a display while it would be otherwise idle.

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