The Breakdown

Explaining Southern California's economy

Meet the new iPad: It's faster and costs a lot

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The much-anticipated Apple iPad event today continues a worrisome trend for the company. The iPhone 4S launched last year, and it's main new feature was the Siri voice-interface. Now the updated iPad arrives — it's unclear whether we can call it the iPad 3, but we will anyway — and the big news is that the 4G version will cost $829, and that the older base iPad 2 will go on sale for $399.

So there's new. But where's the new new? It will have to wait for the true iPad 3. And the iPhone 5. Perhaps.

This is from Reuters:

The newest iPad will be capable of operating on a high-speed 4G "LTE" or Long-Term Evolution network. At speeds roughly 10 times faster than current 3G technology, that may help banish the sometimes shaky video quality of older devices.

Apple is betting a 4G-equipped iPad will tempt more U.S. consumers to pay extra for higher-quality video on the go. That, in turn, should give Verizon Wireless and AT&T Inc a revenue boost, analysts say.

Until now, buyers have been reluctant to shell out extra cash even for iPads with slower 3G connections. The cheaper Wi-Fi-only model - with much more limited Web access - is by far Apple's top-selling one today.

To me, the big news here is that Apple is cutting the price on the most popular iPad. And that's not necessarily good for Apple, although it does give the company a tablet to (sort of) pit against Amazon's $199 Kindle Fire. Replacing the basic Wi-Fi-only iPad2 in the lineup is a Wi-Fi-only iPad3 at $499. From the reports of the Apple event, it sounds like the new iPad will provide a few more features and have much more vibrant "retina" display.

I and others have argued that, given Apple's dominance, there isn't really a tablet market — there's an iPad market. There is, however, a potential cheap tablet market, the beginnings of which Amazon is now exploiting. But will a $399 convince buyers to trade up? Or is the $200 difference just too great?

Apple looks to be creating a market in the middle, a discount iPad market. But not discounted to such an degree that Apple could be accused of cheapening last year's model. Meanwhile, the "best" iPad is still awfully expensive. Plus, it seems that tablet usage patterns aren't as conducive to high-end features and high-speed mobile wireless plans as some folks think. 

Does this mean that as the iPad evolves, its vulnerabilities are becoming more apparent? Maybe. And that means that there's an opportunity to disrupt Apple's dominance. 

Follow Matthew DeBord and the DeBord Report on Twitter.

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