iPad 3 Release Rumors: Why Apple Won't Raise The Price

In a few short days, Apple will finally unveil its next-generation iPad -- presumably called iPad 3 -- on Wednesday, March 7 in San Francisco. Rumors about the device's display, battery life and network capabilities are all-but-confirmed, yet one of the biggest questions many are still wondering is, What's the price? Will it be cheaper or more expensive than the iPad 2?

On Feb. 27, MacRumors believed that the iPad 3 could cost about $70 to $80 more than the current price of the iPad 2, which starts at $499. MacRumors pointed to a single user of Sina Weibo, a Chinese networking site similar to both Twitter and Facebook, who uploaded an image that shows a pricing comparison of the iPad 3 to the iPad 2. Compared to the U.S. price of the iPad 2, the starting price of the iPad 3 is listed at $579 and goes as high as $899 for the model with 64GB, Wi-Fi and 3G connectivity.

This news was initially troubling to Mac users. After all, when Apple launches a new product, it traditionally preserves the price but lowers the prices of any older models. According to the chart found on Sina Weibo, however, the iPad 3 with Wi-Fi will cost $80 more than the equivalent iPad 2 model, and the iPad 3 with 3G will cost about $70 more than the 3G iPad 2. If the chart is true, the iPad 3 would be the first instance of Apple deviating from its original price scheme.

Thankfully, 9 to 5 Mac has refuted MacRumors' report with its own, thanks to the site's tip man Mr. X.

We've gotten word that iPad pricing is going to be the same across the board as the current iPad 2 models which should be no big surprise given Apple's history - they rarely raise prices, said 9 to 5 Mac's Mark Gurman. Even better, some countries with currencies doing better than the US dollar should expect to see marginal drops in prices.

Gurman adds that the pricing change will have no bearing on LTE, one way or another. The iPad 3 will reportedly be the first Apple iOS device to feature LTE's high-speed network, which can achieve faster download and upload speeds compared to 3G technologies. The Wall Street Journal confirms that AT&T and Verizon Wireless are both gearing up to sell an LTE-capable iPad.

This report from Mark Gurman is to be believed over the MacRumors site, for several reasons.

1. Even though anonymous tipsters and social media users have a similarly low amount of clout, Mr. X should be believed. Apple employees -- and even executives -- take on pseudonyms because leaking company information to the media is highly forbidden.
2. Apple can afford to sell the iPad 3 at the same price as the iPad 2: The company announced its best quarter in its 35-year history on Jan. 24, with net income of $13.1 billion on revenue of $46.3 billion. Apple reported holdings of $100 billion in cash.
3. Selling new products at old prices works. Despite advanced processors, an upgraded camera system and a new feature called Siri, the iPhone 4S was priced the same as the iPhone 4. The move worked out for Apple, with the iPhone 4S becoming the best-selling smartphone in Apple's history.

By keeping the price of the iPad 3 at $499, Apple can reduce the prices of its previous tablets. The once-$499 iPad 2 would drop to about $399, while the original iPad could drop to $299 or even $249. A cheap Apple iPad could compete with Amazon and Barnes & Noble, which are looking to make a dent in the tablet space with the cheaply-priced Kindle Fire and Nook Tablet, respectively. Both tablets cost $199.

Whether or not the iPad 3 gets a price hike from its predecessor will be known on March 7, when Apple unveils the iPad 3 in the Yerba Buena Center for the Arts in San Francisco.

The iPad 3 is said to feature an improved camera, a bigger battery, and a dual-LED backlit system to power an 2048 x 1536 true HD display that looks, according to a source who spoke to The New York Times, truly amazing. Apple's dual-LED solution makes the iPad's screen noticeably brighter, but it also apparently solved several puzzling issues with heat dissipation and battery consumption.

There is an ongoing dispute over whether the iPad 3 will be powered by a dual-core A5X chip or a quad-core A6 chip. Code found within the iOS 5.1 beta release showed references to both chips, which indicates that Apple has built both and will wait until the last minute to decide which chip will go into which device. If Apple also releases a new Apple TV box like it is expected to, the Apple TV could be powered by the A5X while the iPad 3 could run on the more powerful A6.

The iPad 3 will also be the first Apple device to feature LTE. Apple hoped to include LTE in the iPhone 4S, but the current implementations of LTE in phones caused very short battery life, which was a major complaint by users. Apple CEO Tim Cook, in a company earnings conference call in April 2011, said first-generation LTE chipsets force a lot of design compromises.

The iPhone 4 PCB [printed circuit board] is already incredibly small, not leaving any room for an extra chip to enable LTE without shrinking the size of the battery, said Anand Shimpi, a chip expert and CEO of Anandtech.

Fortunately, Qualcomm recently unveiled the fifth iteration of its new chip, which supports TD-SCDMA, TD-LTE, HSPA+, EV-DO, embedded GPS, and LTE on TDD and FDD networks worldwide. The chip works with Android and Windows 8 devices, but by targeting so many different carriers, there's a high degree of likelihood that this will be the same chip inside the iPhone 5.

Apple has also reportedly upgraded its front and rear cameras for better Facetime and pictures. This is no surprise -- the camera system on the iPad 2 is now considered low-end, given that it only records up to 720p HD and requires tapping to focus. Assuming Apple outfitted the iPad 3 to shoot stills and video like the iPhone 4S, expect autofocus, video stabilization and full 1080p HD video recording.

Another reason to believe the iPad 3 can shoot 1080p video: Starting late last year, Apple reportedly asked several movie studios to submit content to the iTunes Store in 1080p.

Thus far, 1080p HD content has largely eluded users of Apple products, with HD versions of videos on the company's digital download service maxing out 720p (1280 x 720) and chief executive Steve Jobs balking at adoption of Blu-ray on Macs due to licensing complications and other challenges that he said threatened to translate into a 'bag of hurt.' But that could begin to change later this year, as a handful of feature films being submitted to the iTunes Store for a release in the September and October timeframe are being sent with documentation for an optional 1920 x 1080 resolution, according to people familiar with the matter.

Apple is expected to launch a new version of its operating system, iOS 5.1, along with the iPad 3. If this is true, iOS 5.1 could offer support for 1080p HD videos. The update would also apply to the Apple TV, which currently maxes out at 720p HD. Assuming iOS 5.1 releases alongside a new iPad and Apple TV device, users could start watching full HD videos on their Apple TVs, Mac computers and new iPad 3s starting in early March.

Look for the iPad 3 tiered pricing structure to start at $499.