Update on this post in 2022…
This is a cool post to read later. I had forgotten I wrote this and also forgotten that the iPad ever had the numeric moniker. According to this article on iPad history there was an iPad 3 and iPad 4 but then they dropped the numbers.
And Apple actually started the differentiation I advocated by introducing the iPad Mini the following year (2012), and iPad Air (2013) and finally an iPad Pro 4 years (2015).
Original post…
For the past few years, the most anticipated events in consumer technology were the release of new Apple products. The iPhone 3, iPad, iPhone 4, iPad 2, and even the more debatably exciting iPhone 3GS and 4S.
This has been in large part driven by the innovative nature of each new phone, whether it was FaceTime, Siri, a two way camera, or faster hardware. However, I think the biggest factor encouraging iPhone purchases is the natural upgrade cycle of cell phones. Every two years AT&T (and now Spring and Verizon) will offer you a discount between 40-80% list price for a new phone if you sign up for their data plan.
Unfortunately for Apple, the iPad has no natural upgrade cycle. People don’t currently have tablets and carriers aren’t subsidizing these purchases.
So- how can Apple create this biennial demand?
I think Apple should create two product lines under the iPad branding: one entitled “iPad” and one “iPad Pro”. The iPad would be similar to the current iPad, focused on portability and connectivity. However, the new iPad would no longer contain an only Wifi option- you would need to get a data subscription to buy it.
I think you could find a sweet spot for price at $199 with a two year data plan at $30/month minimum (subsidized by the carriers). This would completely change the market. 1) Apple would be able to compete with on initial price with Kindle/Nook/etc… and 2) Bring iPad into the same two-year upgrade cycle and greatly increase sales as people seek out the cheaper price at the end of a contract.
Then, they would have an iPad Pro. The iPad Pro would explicitly cannibalize the notebook market (and the beloved Macbook series). It would come with a connectivity kit that allows you to plug it into a “Pro” station with a monitor, keyboard, external hard drive and Apple trackpad. The hardware will be significantly faster and more robust than the regular iPad (when it comes out at least), and it will be able to optimize the UI for both tablet and desktop computing.
With just wifi you could probably find a base price of $499 ($999 including a basic iMonitor/full kit). This could go up to $1999 with a decked out iPad and station. This would create a very high margin product bundle. It would also separate the market into distinct segments: the fast updating consumers and slower more enterprise type customers.
Instead of an iPad 3- I think Apple should release an iPad and iPad Pro, and update them around these new market segmentations.