Expanding product line at different price levels is smart I believe: Apple has already the market share leadership with high profit margin. Now is the time to consolidate the leadership position and preempt potential competitors like Amazon. Having three models is not that confusing to consumers, who are segmented to begin with.
DigiTimes published its interpretation of the chatter it’s hearing on Tuesday, suggesting we could see a Wi-Fi iPad 2 starting at $299, then a mid-tier iPad 3 with beefier specs including an A6 processor but the same resolution display as the iPad 2 starting at $399, and finally a high-end iPad 3 with the A6 and a 2048×1536 high-res display starting at $499. The idea that what separates the two iPad 3 models is the presence of a Retina Display makes sense
Having three versions of the iPad available at once seems like a bit of a leap from the current sales model, which simply offers different connectivity and storage options for one device, but it’s not like Apple hasn’t done this before. The iPhone, for instance, now offers three distinct models: the 3GS, the iPhone 4 and the iPhone 4S. The iPhone 4 and the 4S resemble each other closely but are separated by $100 in terms of entry-level pricing for new models, just as DigiTimes anticipates the two tiers of iPad 3 to be.
The issue is that with the iPhone, the 4S came along as a successor to the 4 and when the older model remained on the market, Apple essentially clipped its wings by offering only 8 GB of onboard storage. Introducing two new devices at once and keeping an existing model, presumably with different connectivity and storage configurations, as DigiTimes suggests, would result in a lot of overlap of pricing and generate confusion for customers. Apple has traditionally eschewed overly complicated product offerings in favor of a simplicity that helps focus customer buying decisions.
Despite this new report, it makes the most sense for Apple to focus on two devices in light of the above considerations. Covering the pricing gap with an iPad 2 starting at $299, then ranging up based on configuration options and offering the iPad 3 at $499 makes the most sense if Apple really does want to attack the low-cost market while also giving its next-gen tablet the best chance to repeat the success of its predecessor.