Friday marks the release of the latest and greatest iPad, and while electronic geeks boast of its revolutionary screen resolution or LTE speeds, I think the real story here is the price. Specifically, it’s the price of the iPad2 and even the original iPad.
While Apple could have raised prices $70-$80 for its 3rd generation iPad (this was the running rumor last month), it chose to preserve the $499 entry price point. Why? Apple wants to keep the competition at bay.
When it comes to the tablet market, there are two types of customers: the haves and the have-nots.
The haves are the gadget crazy electronic geeks who already own 1-2 tablets. This customer segment loves the new iPad with its retina display and LTE speeds. Even though many in this segment already own an iPad, after seeing the 3rd generation iPad they are thinking about trading it in for a new one (note: Apple will give you credit for your old iPad).
The have-nots don’t currently own any tablet but want one. They don’t really care about the technical specs but rather seek a tablet experience. This group is a bit more practical and thinks about tablets in terms of utility, ease of use, and price. For them, they like the new features (everyone likes pretty screens) but who needs a tablet with higher resolution than their TV. Thus, being a bit more sensitive to prices, these customers are attracted to the iPad2 or even the 1st generation model. Many of the have-nots were previously thinking about buying a Kindle Fire or Nook, but now they will be reaching for a bit more cash to grab a coveted Apple iPad.
And this is why the introduction of the 3rd generation iPad is a big deal. It’s not any of the new features that prove Apple’s tablet domination clearer than ever (TechCrunch), rather it is the pressure Apple is putting on the marketplace to create awesome tablets for cheap.
I for one look forward to Amazon’s rebuttal.