iPad 3 Launch: Will it Prompt Apple to Drop iPad 2 Price to $299?

The rumors about Apple's next tablet - dubbed the iPad 3 - are surfacing endlessly, prompting Apple fans to wonder whether the technology giant will drop the price of the iPad 2 when its successor hits the market.

Recently, the Taiwan-based tech newspaper DigiTimes reported that two new iPad models, instead of one, will be released during the Jan. 26-28 Macworld/iWorld expo in San Francisco. Including the current iPad 2, Apple's tablets are expected to cover the entry-level, mid-range and high-end market segments.

According to DigiTimes, the two new iPads will share some common features - a 10.7-inch QXGA screen (1536 x 2048) and A6 processor. However, one will boast an 5MP camera whereas the other will feature an 8MP one.

Tom's Guide, however, has a different story to tell. The site, citing Apple's supply chain, claimed that only the high-end iPad 3 would sport the high resolution QXGA panel (2048 x 1536), whereas the mid-range model would only have a XGA panel (1024 x 768), or same as the current iPad 2's.

If the rumor is true, it means Apple will offer three kinds of iPad at the same time - iPad 2 with A5 Chip, XGA panel and a 0.3MP camera (for the entry-level market), and two iPad 3 - A6 chip, XGA panel and 5MP camera (for mid-level market) and A6 chip, QXGA panel and 8MP camera (for high-end market).

Hence, it won't be surprising to see Apple drop the price of the iPad 2 to capture the entry-level market, when the iPad 3 debuts.

If so, the iPad 2 will be competing directly with the low-priced Amazon Kindle Fire, which is sold at $199. Amazon said the Kindle Fire is its best-selling product ever and reports claim the company sold up to 1 million Kindle units each week during the holiday season. Feature-wise the Kindle Fire is no threat to the iPad 2, but it cannot be denied that its price point might lure Apple fans.

No wonder, speculations are rife about the iPad 2's price tag when the new iPad (or iPads) hits the market. According to Tom's Guide, Apple might drop the price to $299, or $100 more than Kindle Fire. The current price of the Apple tablet is $499 (for 16 GB), $599 (for 32 GB) and $699 (for 64 GB). We won't be surprised if the $299 iPad has 8GB storage capacity as Apple also launched an 8GB iPhone 4, which carried a price tag of $99 after iPhone 4S was released, to compete with entry-level smartphones.

However, CBS News thinks otherwise. Though they agree that iPad 2 might witness a price cut, they say it will not be deep as Apple needs to think about the manufacturing cost.

Last year, iSupply estimated that the component cost of iPad 2 32GB model totals $326.60, and including labor, it would add up to $333. The most expensive part of the tablet is the LCD screen, which costs $127. Hence, it is unlikely that Apple might go the Amazon way and sacrifice profit margins to promote its product.

ZDNet has a similar opinion. The site said iPad 2 is still very popular, even though Kindle Fire may pose a threat. Hence, there's no necessity of cutting down the price of the iPad 2 to $299, or $200 less than the original price. Moreover, Apple knows that once the price is slashed, there is no way to push them back up.

What do you think? Will Apple slash price of iPad 2? If yes, by how much? Leave your comment below.

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