Chitika think that’s a sign that people are holding back on upgrading to the new iPad, and points to “the perceived minute differences between the iPad 2 and iPad 3, discouraging users of older iPads to upgrade.”

But, Apple sold 17 million iPads this past quarter, a record for the company, and Apple CEO Tim Cook specifically said that the most popular iPad sold was the lastest, third-generation iPad. There is a data discrepancy here, however: Chitika is talking about web traffic from iPads in the U.S. only, and Cook is talking about global sales.

I think this can also be explained by how important the iPad 2′s discount, starting in March, has been to that model’s success here in the U.S. Discounting the iPad 2 by $100 to $399 was smart for a couple of reasons. Yes, it put the iPad in the hands of more consumers who weren’t excited about spending $500 on an iPad, but it’s also opened the floodgates for schools to be able to buy them for students. (And that coincided with a bigger push from Apple in general toward education apps and books.)

Apple said last week that between April and June this year, it sold 1 million iPads to schools — a quarterly record for the company. It has had a record-breaking quarter for Mac sales to schools, yet it sold twice as many iPads as it did Macs.

On the company’s earnings call with investors, Cook said pricing was a big part of the iPad 2′s success last quarter: ”We priced the iPad 2  to $399 and did very well but, the most popular iPad is the new iPad. But iPad 2 was key in the K-12 area. We have been very aggressive in this space and I don’t see changing that.”

Apple’s very savvy about how it prices its products and simultaneously squeezes profits out of them. Its success with the iPad 2 even since the introduction of the brand new iPad shows that. That’s why this fall is going to be so very interesting in the tablet world. With Google, Microsoft and Amazon undercutting or trying to undercut the iPad on price with smaller but compelling tablets, Apple’s decision on how to price the still-rumored smaller iPad is going to have a significant impact. Not only on its competitors, but on its own profits as well.

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Are the days numbered for the $399 iPad 2?

When Apple announced the new iPads in March, it dropped the cost of the lowest-priced iPad 2 (the 16GB Wifi only version) by $100 and continued to sell it side by side with the third-generation iPad. This is not in the usual mold of clearing out previous generation products at a reduced price.

Analysts speculated that Apple kept the iPad 2 around to counter the threat from cheaper tablets, specifically Kindle Fire. Despite being a year old, the iPad 2 is packed with power and features that other tablets do not come close to matching. Offering it at $399 helped bring in new customers who didn’t consider buying it at $499 and snag some who would have bought a Kindle Fire.

It is a win-win for Apple — almost. The $399 price point is also attractive to those who otherwise would have bought the new iPad at higher price points. This is what economists call second degree price discrimination. When offered multiple options at different prices, customers pick the one that gives them the most value (consumer surplus). In the absence of the $399 iPad 2, customers would have picked the pricier new iPad. But when offered side by side, some see higher consumer surplus from the iPad 2 than the new iPad. That is exactly why Apple kept just the 16GB Wifi model of the iPad 2 and not the entire product line.

For every customer who chooses to buy the iPad 2 instead of the new iPad, Apple loses $100-plus in pure profit (the cost difference between the models are marginal). If that total loss turns out to be more than the profit from selling the iPad 2 to new customers, Apple will quickly pull the plug on the iPad 2.

We will not get a breakdown from Apple on the number of iPad 2s and new iPads sold. But we can figure out these numbers by doing simple math on Apple’s earnings statement.  Last quarter, when it had the $399 iPad 2 for only a month, Apple sold about 2.1 million $399 iPad 2 units. That was 18 percent of the total number of iPads sold, which did not increase much from the previous quarter. This translates to just 10 percent of total iPad revenue. The higher the number of iPad 2 units sold, the lower its contribution to revenue.

This is the first full quarter when iPad 2 and the new iPad are sold side by side. Apple would prefer to keep the iPad 2 proportion at 18 percent or lower. If that number goes up, it signals significant erosion of Apple’s iPad profits by its own product.  The worst case scenario is that Apple sells three times as many iPad 2s as the previous quarter without a net increase in total number of iPads sold.

When the earnings report comes in next month, pay close attention to the iPad numbers. If you have been waiting to buy one, you might want to grab one now before they’re gone.

Rags Srinivasan is a management professional who specializes in product strategy and strategic marketing. He is currently working on big data products. He blogs at Iterative Path and tweets at @rags.

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1. Gazelle: The website Gazelle is one of the easiest ways to sell off Apple gadgets that are slightly used but still in decent shape. Gazelle is buying good-condition, used iPad 2′s (64GB, with Wi-Fi, and 3G) for $330 ($350 for flawless, and $125 for broken). For a good-condition 16GB iPad 2 with just Wi-Fi, they’ll pay $240. Gazelle is easy to use because, depending on what you’re selling them, they’ll send you free shipping labels for FedEx or UPS, and even a shipping box. Then, when they confirm the item, they’ll send you a PayPal amount or mail you a check or Amazon gift card (you choose). The down side of Gazelle is that all that ease and convenience costs the company money, so they tend to pay less than you could sell an iPad 2 for on other sites.

2. eBay and Craigslist: Yes, they’re the obvious places, but in contrast to the ease and convenience of Gazelle, eBay and Craigslist require a lot of effort. However, in exchange for that effort, you can sell a good-shape iPad 2 for a higher price. The going rate for an iPad 2 with 64GB and both Wi-Fi and 3G on eBay is $425. The 16GB, with just Wi-Fi, is going for $250.

3. BuyMyTronics: A website called BuyMyTronics, similar to Gazelle, will buy your used and even broken Apple electronics and either resell or recycle them. As with Gazelle, shipping and getting paid is pretty easy. They’ll pay you $288 for a decent-shape iPad 2 64GB with Wi-Fi and 3G, and $192 for a 16GB iPad 2 with just Wi-Fi.

4. NextWorth: Like Gazelle and BuyMyTronics, NextWorth gives you a third option for an easy sale of a used, average-condition iPad 2. (When iPhone 4S launched, some of these reseller sites were inundated with too many old iPhones, and they were forced to cut the prices they’d pay for these. So check out all three of these sites before settling on a price.)

5. Back to Apple: Apple has a reseller and recycling program, and it’ll pay you for a good-condition Apple product, though you’ll generally get less than the sites described above and will be paid in Apple credits. That site is currently down (maybe getting ready for iPad 2 resales?), but we’ll update you with how much Apple will pay you for a used iPad 2, when the site goes back up.

6. Watch out for shady resellers and buyers: Make sure the site you choose to sell to, or the buyer you choose on eBay, is legit. The site called Cash for iPads just looks sketchy. Maybe it’s not, but be sure to read the reviews of the buyer before sending money (and particularly cash!).

7. So your iPad 2 is a brick: If your iPad 2 is totally broken and not functioning, there are still some decent options for you. For example, Gazelle will still buy a 64GB version with 3G and Wi-Fi for $125. But perhaps a better option for you is recycling: Apple will take back old broken iPads. Big retailers like Best Buy, RadioShack and Staples often have free recycling drop-off boxes at their stores — call your closest one to find out if they have that option.

8. The do-gooder option: If your iPad 2 is working fine, but you still plan to upgrade, there are many schools and charities looking for iPad donations, given that the iPad can be a solid teaching and communication device. Apple encourages customers to donate their old iPads to Teach for America Corps, while The HollyRod Foundation is asking for donated iPads for special-needs kids and families. iOS developer Steve Glinberg also created the iPad Recycling Program.

9. Don’t landfill it: The worst option you have is to open up the trash bin and dump it. That means, not only are you wasting precious materials that could have been recycled, but the chemicals from the battery and electronics will sit in the landfill and leach into the ground. Also, you’re wasting money.

10. Don’t sit on it: The second-to-worst option you have is to put it in the back of a drawer and let it sit there for years. Then you’re not taking advantage of the money you can get from reselling it, and the odds that you will actually recycle it drop over time.

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When I’ve sold gadgets in the past, I’ve dealt often with Gazelle: I’ve always received what I think are fair offers and have never had an issue getting paid. But our good-condition devices, a 16 GB Wi-Fi iPad and a 32 GB Wi-Fi iPad 2, were only worth $140 and $240, respectively, to Gazelle. That seemed low to me, simply because people that I know who are looking for used iPads seem willing to pay more. The hunt was on for a better price.

It didn’t take long to do a Google search for the phrase “sell iPad” and find numerous third-party sale options. We could have gone the eBay route, but I prefer a fire-and-forget strategy to get the best price and move on quickly. Various sites were all offering different amounts for used iPads, which I presume reflects a limited market supply coupled with strong demand.

Ten minutes into our hunt, we found a gadget-purchase site willing to give us $241 and $349 for our two iPads. That was the best deal we could find, so we jumped on it and committed to selling our iPads. We have two pre-paid boxes on the way and just need to pack up our slates, drop the boxes off at a local UPS store and wait for our money.

Update: Thanks to reader, Amanda, for pointing out that Amazon’s trade-in program can be used as well. I spent a minute checking (taking me up to 11!) and found that Amazon will offer us even more money: $246.50 and $361.25. Shipping is free and have to send the devices in by March 5. Some readers expressed concerns about the site I pointed out in the post, but I have full faith in Amazon to credit my account for the stated values. Note that reader, Ricky, mentions Radio Shack  as another well paying option with no hassle.

We may not have the proceeds before the iPad 3 arrives, but at least we’ll have more money for our upgrades than we thought. If you’re going to sell your iPad in advance of the next model, I wouldn’t wait much longer if you want to get the maximum value for it. And by all means check the various offers out there for iPad buybacks, which can change daily; a little bit of time and effort could put some extra money in your pocket or towards your iPad 3.

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Zinio

Selection:

Zinio is the oldest, most mature magazine platform on the iPad, and as a result has the largest selection. The music and photography sections are well stocked. The only writing magazine available I like is The Writer (Writer’s Digest is missing) and for Apple-related magazines Macworld magazine is available, but MacLife is not.  As an aside, while Zinio does carry adult magazines, those are not available on the iPad app due to Apple’s guidelines. Where Zinio’s selection truly shines is the large back issue catalog — Digital Camera World has issues going back to 2002. News and tech-related magazines tend to have a short shelf life, but for arts magazines I love I can go that far back. The News section seems well stocked, but, oddly, the the Russian version of Forbes is the only one available.

The  shopping experience is very unobtrusive. Since Zinio’s primary business is selling magazines, it’s very easy to browse the store and purchase magazines from either your browser or app. Zinio does a good job at organizing the magazines into sections, so you can browse just by Photography or Music sections. It would be nice to see another sub-level where I could sort by just guitar-oriented magazines.

Zinio has the highest up-front cost of the three options because most subscriptions are for the year, and individual prices are close to newsstand prices.

Reading Experience:

The first few releases of the app were rough going with each page taking a while to come into focus, but with the latest version of the app, I barely notice it on an iPad and never notice it on an iPad 2. The text has a nice weight and the images look fine. You can sort your reading view by issue release date or title, but you can’t group them by section. The quality varies on the table of contents between magazines. Some magazines just show you the content page; others have an interactive table of contents, making it easy to get to the article you want to read. There is an option to display a lengthy article in an easy-to-read text format, but it not used nearly enough. You can bookmark pages, but not highlight passages.

Macworld magazine in the Zinio app

Amazon

Selection:

Of the three options, Amazon has the poorest digital selection with roughly 420 Kindle magazines available. Amazon’s Arts and Entertainment digital magazine section has only 120 magazines; Zinio’s Photography section (also under its Arts section) has 118 magazines alone. That said, there are a few magazines like Guitar World that are available on Amazon, but not Zinio. Searching the store is a bit of a hassle. The default sections are too broad making it hard to narrow your selection. Also the keywording isn’t implemented well; searching on Photography did not bring up Digital Camera World, but searching on Camera did.

There are also no back issues available. This is a problem if you get into a new interest and want to get a backlog of magazines. As I mentioned in the Zinio section, it’s nice to get into a new hobby like photography and be able to scour the back issues.

In terms of pricing, I found Amazon to be the most consumer-friendly. Most magazines can be subscribed to month-to-month for about $1 to $2.99 and a free 14-day trial is available for all magazines. Unlike Zinio, you do not have to purchase a full year upfront.

Reading Experience:

Your magazines are well-integrated into the Kindle app, showing up in both the All Items view and the Newsstand tab. I found the page layout view to be the poorest of the three, with the text being slightly heavier than Newsstand and Zinio; it’s about halfway between regular and semi-bold. Against  a white background it’s not bad, but it really looks poor against a color. What is nice is Amazon’s Text view for magazines is much more useful than Zinio’s. It’s supported on each page and you can customize the layout and fonts.

Finding old issues you want to download, again, isn’t clean. All of your old issues are in a Periodicals: Back Issues folder. Back Issues also seem to go into the Archived section of the Newsstand tab. What’s a little weird is if you archive a magazine it only shows up in the Archived area, not also the Periodicals: Back Issues folder.

Mac|Life magazine in the Kindle app

Newsstand

Newsstand isn’t one service. Instead, it’s a collection of magazine apps that are grouped by Apple into their Newsstand folder in iOS 5. While each app does have its own idiosyncrasies, there are  some common themes I’ll be mentioning here.

Selection:

The selection for Newsstand roughly falls between Kindle and Zinio with around 1,620 Newsstand apps available. However, it’s in searching the thing falls down on its face. You can either search the store for the magazine and then refine the search for Apps only, or you can scroll through the entire Newsstand catalogue. It’s darn near impossible to browse a section. Shutterbug magazine will show that it’s in the Photo and Video section, but clicking on that section shows me all of the Photo and Video apps; not just Newsstand apps. You also cannot search and purchase through the web.

Most magazines are available for monthly $1 to $2.99 subscriptions with a few I’ve seen having a minimum of a three-month subscription. There are no free trials. Back issues vary from app to app; some only go back to when the app was launched, some go back over a year.

Reading Experience:

For the most part, reading a Newsstand magazine is on par with reading a PDF of the magazine. While that’s largely true of Zinio and Amazon, at least they offer niceties like the table of contents and a text view; the Newsstand apps I’ve tried do not. Also, there is no bookmarking or text selecting. Newsstand apps take a second or so to focus in on my iPad, but it’s better on my iPad 2. However, unlike the Kindle app, the text looks fine in page layout view.

While Newsstand does a decent job of grouping magazine apps together, the entire reading experience feels kludgy. If you have a lot of apps, it’s hard to find out which ones have recent copies since the app stays in the same place in Newsstand even after a new issue has been downloaded — although some of the apps show a “new issue” flag on the app. You can turn on notifications and badges, but I limit my notifications to alerts that are truly important.

An obvious point that bears mentioning is that Newsstand is the only one of the three that’s not cross-platform. One of the draws of Zinio and Amazon Kindle is they do work on non-Apple devices. If you also have a Kindle Fire in addition to your iPad, Newsstand is not the choice for you.

Mac|Life magazine in Future's Newsstand app

Where my purchases go

When I look for a magazine, Zinio still remains my first destination since that’s where the bulk of my library resides. After that, I look on Amazon for a Kindle version. If it’s not on Kindle but is on Newsstand, well, frankly I make a decision if I really need the magazine that badly. There are two reasons I choose the Kindle second, even though the quality is the poorest of the three: it shows up with the rest of my books in the Kindle app, so I only have two apps that I need to look towards for reading — and it is cross-platform. One thing I’m trying really hard to do is make sure the content I consume is cross-platform. With iOS, I know I’ve got some lock-in on apps, but since Zinio and Amazon have gone out of their respective ways to make sure my content can be read on different platforms I know I can read my books and magazines on a Kindle Fire if I get one.

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Enterprise mobile security provider Good Technology on Wednesday released its quarterly data report for the fourth quarter of 2011. The report detailed the progress of iOS and Android devices in enterprise activations among its customers, which include half the companies on the Fortune 100, among others. Apple’s iPhone 4S was the big winner of the quarter, nabbing the top spot as the most-activated device, followed by the iPhone 4 and iPad 2 at Nos. 2 and 3, respectively.

Credit: Good Technology

The 4S represented 31 percent of all device activations counted during the quarter, nearly matching the total for all Android handsets, which accounted for 35 percent of all smartphone activations. Apple’s iPad 2 and iPad together accounted for 94 percent of all tablet activations.

Much like we’ve seen with new consumer device purchases, the release of Apple’s iPhone 4S in October began the reversal of a trend in which new Android activations were approaching Apple’s numbers, as you can see in the chart below. From October to December, Good saw a steady monthly increase in the percentage of iOS activations, matched by a decrease in Android device activations. Good says bring-your-own-device (BYOD) policies likely had a strong impact on Apple’s enterprise success with the iPhone 4S.

Credit: Good Technology

A new phone from Apple was bound to incite a buying spree, but the numbers have remained strong in the months following launch. It will be interesting to see if the trend of growth continues, both in the consumer and enterprise markets, now that the 4S has been on the market for some time.

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We do indeed appear to be approaching the crucial moment, as Bloomberg reported recently that production of Apple’s next-generation tablet is now underway in earnest ahead of its official consumer availability, and the device includes LTE connectivity as well as a new, high-resolution display. Macotakara’s new report merely puts a more specific timeline on something many suspect to be imminent.

It’s worth noting Macotakara also accurately called the release timeline of the iPad 2, though they were a little off on the announcement; it had cited February as the month for the unveiling event, and March as when it would make its way to consumers, and Apple actually announced the device on March 2, 2011, and began selling it March 11. The site also said in Oct. 2011 that the iPad 3 would begin wide production in January, with release planned for March.

If you’re a user pinching pennies in advance of an iPad 3 release, budgeting for March definitely seems like the best course of action at this point.

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