Do We Need More iPad Versions?

January 27th, 2011

Today, there are basically two versions of the iPad, each with three configurations: The Wi-Fi version and the 3G variety to allow you to access a wireless carrier’s network. Since the 3G radio is GSM, Verizon Wireless has been forced to sell a separate adapter with a Wi-Fi iPad if you prefer to use their data plan.

When the next iPad arrives, and the betting has that event timed for anywhere from late February until April, it is quite possible Apple will sell a single version supporting CDMA, for Verizon and a few other carriers around the world, and GSM. Perhaps the new LTE standard will be added to the mix, assuming that new chips are ready and reasonably bug free. That way, you can buy your 3G (or 3G/LTE) iPad, and decide later which carrier’s data plan you want.

To me, this combo approach would make the most sense. With a cell phone, most purchases are made of models tied to contracts. Handsets are generally unique to the carrier, sporting that carrier’s logo and custom features. Except for the iPhone of course.

For an iPad, you buy the product free of a contract (although that may be a possible alternative), and you should be able to decide later which service to use.

What’s more, if you move, or plan to spend an extended amount of time in a location where your carrier of choice doesn’t deliver a decent signal, you’ll never have to wait more than a month to switch free and clear. Of course, that assumes that carriers won’t be offering subsidized versions that tie you to the standard two-year contracts, with the usual exorbitant early termination fees if you decide to leave.

Considering the huge profits the iPad is generating, I also expect that Apple will be able to absorb the increased costs for using these parts, and possibly a display with double the resolution of the current model. They may even access some of their multi-billion dollar largesse to ensure decent quantities of cellular radios, along with flash memory, LCD displays, and so on and so forth. It’s not as if Apple tells us anything other than the amounts being spent. After all, they don’t what the competition to know which markets they’ve cornered, although they’ll discover soon enough if they can’t get certain parts in the quantities they need.

More than likely, the next iPad (call it iPad 2 or iPad Pro) will otherwise be available for pricing similar to the current model, although one would hope Apple will at last be able to offer larger storage too, assuming the higher capacity chips are more affordable.

Another possibility is discussed in an article from columnist John Martellaro, of The Mac Observer, where he suggests Apple adopt the marketing approach taken with the iPhone. So, for example, you can buy an iPhone 4 in two configurations from AT&T and other carriers, or get the 2009 model, the 3GS, for just $49. This is close enough to free that even the customer for whom a $199 or $299 smartphone isn’t on their radar might consider the low-end alternative. Verizon Wireless will only offer the iPhone 4, however.

What this means is that both the new and the original iPad would be offered at the same time. The older model would carry a price tag of $100 or $150 less for each configuration. Imagine a $349 (or $379) iPad, compared to, say, a $300 netbook? Even now, netbook sales have been slammed in large part because of the iPad, and, naturally, the fact that those tiny note-book PCs aren’t very good. Talk about buyer’s remorse.

Just as the iPhone 3GS isn’t materially hurting sales of the iPhone 4, I don’t see the new/old iPad arrangement hurting Apple’s prospects. Indeed, many customers who, as with cell phones, wouldn’t consider an iPad at $499 would be far more likely to buy the cheaper model.

This strategy will also seriously damage the prospects for success of iPad killers. Although over a million Samsung Galaxy Tabs have been sold around the world, there is no cost advantage over the iPad unless you buy the subsidized version from a wireless carrier. So far, Apple’s competitors haven’t been able to beat the iPad on price, and that will become more and more difficult because of the great supply deals that COO Tim Cook continues to make.

With the old iPad in the lineup, even a feature-bare version of an iPad wannabe will probably have difficulty gaining sales traction. Indeed, there are already a few knock-off tablets selling for less than $200 that aren’t doing very much in the marketplace, simply because they’re pieces of junk.

Of course, there’s precedent for Apple hitting different price points with its consumer electronics gear. In addition to offering a legacy iPhone, the iPod is available in a number of configurations starting at just $49. If you want an iPod, the affordability question is not a deterrent, unless it just has to be an iPod touch. This is one of many reasons why, even with eroding sales, the iPod remains top drawer in market share.

If you think Apple only wants to sell expensive gear, check their recent history and you’ll be in for a surprise.

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2 Responses to “Do We Need More iPad Versions?”

  1. David says:

    I think a iPad lineup that looks like the iPhone lineup makes sense. The iPad 2 may make the move to universal CDMA/GSM support a few months before the iPhone does, but both should eventually do that. It’s simpler and cheaper to produce only one model and have it compatible with almost every carrier in the world.

    That $49 iPhone 3GS is really a $450 iPhone with a carrier subsidy. Apple still doesn’t do cheap and never will.

    • @David, A $49 phone from any manufacturer will also mean several hundred dollars to that company with a two-year contract. Apple might receive a higher payment, but the end user pays the same regardless.


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