The iPad 2 with Smart Cover (Photo credit: Wikipedia)
It's a common sales technique to have a low priced product to act as a gateway to an ecosystem, and it's a technique that Apple has used on many an occasion. But with the launch of the iPad Air and the iPad Mini with Retina Display, why are Apple keeping the iPad 2 on sale at $399?
Launched in March 2011, the second generation tablet's specifications are anaemic when compared to the iPad Air, or even the iPad Mini Retina. But it still has a part to play in Apple's sales strategy. It's very much psychological. For many consumers, tablets are scary. As much as there are people want more power, more pixels, and more performance, for many people all that is needed is a solid web browser, access to email, and the ability to play Candy Crush Saga. If you follow the 80/20 rule on the tasks performed by a tablet, the venerable iPad 2 can easily cope with the 80%
The iPad 2 provides new users with a comfortable way into the tablet experience, because older is simpler, isn't it? For a certain segment of the population, the iPad 2 is still a good choice to make, even if the older ARM Cortex-A9 struggles a bit with iOS 7.
But that's not where the real value of the iPad 2 lies. Keeping the tablet in the line-up is going to be the best up-selling technique ever.
Once someone is ready to spend $399 on the iPad 2 (plus taxes, other currencies are available, but let's use the US as an example), the sales team can get to work. Would they consider the original iPad Mini with more memory or a smart cover for the same price? How about moving to the iPad Mini with Retina Display for the same price? Or for just $100 more and I can sell you the iPad Air.
The iPad 2 will get many new people through the Apple door, at which point the majority of Apple Store staff will be able to get the customer onto the latest hardware. And if they don't, then I suspect the margins on the iPad 2 will be more than welcome in Cupertino.
