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Will the new iPad drive massive upgrades?

73% of Mobile Nations iPad 2 owners are planning to upgrade, but to what exactly?

While we wait for tomorrow’s big iPad event, I thought it would be fun and informative to explore whether or not the next iPad (iPad 3 or iPad HD depending on which rumor you listen to) would drive massive upgrades for Apple.

Last week we ran a Mobile Nations survey on the state of tablet adoption. Now we have to keep in mind that the folks who come here to read about Apple products and fill out surveys about their use of Apple products are clearly early adopters. So your responses don’t tell us what the mass market is doing. But they do tell us what early adopters are doing. And that’s still useful. It's also important to remember that the survey wasn't just of iMore readers, but Android Central, CrackBerry.com, WPCentral, and webOS Nation as well. So we're dealing with more than just Apple enthusiasts.

Check out this statistic: In our survey, a whopping 73% of iPad 2 plan to buy a new tablet this year. The stats also suggest that interest in Windows 8 is significant, though. Of the 73% people iPad 2 owners who plan to buy a new tablet, a solid 18% of them plan to switch over to the dark side. No other competing platform has anywhere near that much interest from current iPad 2 owners in our survey.

We’re assuming that it’s a fact, at this point, that tomorrow’s iPad announcement will include a Retina display that's 4x the pixel density as the current iPad. This opens the door for Apple to leave the iPad 2 on the market at a lower price point.

Given the huge margins on iPads and the massive market opportunity that Apple is going after, I think it makes sense to keep the iPad 2 on the market at a reduced price. Lower prices will make it easier to go after the education market, for example.

A lower price also makes it easier to compete with the $199 price points of the Kindle Fire and BlackBerry Playbook. $499 for an iPad feels like a big stretch versus $199, but when you consider the larger size and super HD resolution, it’s compelling for those who can afford it. But if Apple could keep the iPad 2 on the market at a price that makes it easier to upsell people away from a $199 competitor, all the better.

So what about all the people who plan to upgrade? If the iPad 2 price gets cut as I’m hoping, then there will naturally be a flood of very low-priced “gently loved” Apple tablets hitting Craigslist and eBay.

The name of the game, for Apple, is to own mobile computing. They never owned the PC market and perhaps they never will. But they can dominant in mobile computing and I think an iPad 3/iPad HD along with a price cut on the iPad 2 is a great opportunity for them.

Chris Umiastowski

Chris was a sell side financial analyst covering the tech sector for over 10 years. He left the industry to enjoy a change in lifestyle as an entrepreneur, consultant, and technology writer.

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There are 34 comments. Add yours.

tyson says:

In order for this to be a serious competitor on the tech side of things, it must have 4G. Anything less would be a failure to capitalize on the existing tablet market already featuring this technology.
Apple has lagged behind in the innovation of products since Steve left the CEO position. Slapping Siri on a device and calling it the 4S is far from the innovation Jobs was hoping for.
Let's hope they are the next generation innovators with this next refresh..

slicecom says:

I disagree with your assessment of Apple since Steve Jobs left the CEO position. Apple has developed a clear pattern with the iPhones, every year a new iPhone is released and every second year its a major upgrade.
3G major redesign
3GS minor revamp
4 major redesign
4S minor revamp
? major redesign
This pattern was developed when Steve Jobs was CEO and they're just continuing along the same pattern.

MrDevali says:

The 3G was not even close to a major redesign... All it added was a 3G radio ios2 and app store came to iPhone 1 and 3G the same day. And a new plastic back... All the hardware was identical minus 3 radio.

slicecom says:

You prove my point even further then. Apple had plenty of minor upgrades with Steve Jobs as CEO.

ward09 says:

I really want to give you a "thumbs up".

dloveprod says:

I think the price would have to drop to $299 to really take away from the Kindle Fire or Nook. Then it might be close enough where people might spring for it.

slicecom says:

Oh man, if that happens, the guy I just sold my iPad 2 16GB Wifi to for $400 would be pissed! ;)

dloveprod says:

Yeah he will, lol, you did good.

Shameer m. says:

This is where a 7" iPod touch with a $299 starting selling price comes in handy.

Brock says:

Phones are one a two-year upgrade cycle. But that's for crap phones. The iPhone holds up better. My 3GS isn't my primary phone any more, but my son uses it and it works great.
Computers and laptops are generally upgraded every 4-5 years.
I expect the iPad will be somewhere between the iPhone and the laptop. Maybe three years. That's just a guess.
I doubt iPad 3 will drive upgrades. Technology doesn't advance quickly enough to make the iPad 2 obsolete in just one year. Rather the iPad 3 will be like the iPhone 4S - iPhone 4 users still happy; but sales growing like hotcakes from new customers. iPad 3 will continue to drive the whole tablet segment into new markets.

williamsbh76 says:

I agree with your reason as to why I will probably not upgrade to the iPad 3. It's going to take an impressive list of upgraded features to make me upgrade. Retina Display, A6 quad-core, LTE, and possibly one other secret upgrade that we have not seen comming. No less than all of this. Also, if Apple chooses to continue selling iPad 2's at a much lower price, I won't get enough return to justify getting rid of old faithful. As for the rest of the market, I see a great number of people because is the next great thing from Apple and they have to have it. Maybe not to the tune of the iPad 2's sales, but it will no doubt be impressive.

Sancho90 says:

As long as it has a a retina display, and enough internal optimization/power to run it with the trademark Apple fluidity... I'm absolutely sold. More so on the retina display.

Dev says:

My parents are salivating over the next one; they have an iPad 1, and my mother, who heretofore would not touch a computer, monopolizes the iPad so much that my father never gets to touch it.
As for me, I will trade in my iPad 1 as soon as some vertical apps I need have credible iOS versions; until then, I cannot really use it for business, and my laptop and iPhone combo fill the business/rec time just fine.

rewNATION says:

these things are a ripoff anyway...I can buy an actual computer for the same price and it'll have more functionality than an ipad

slicecom says:

I thought the same thing (overpriced giant iPod) until I won an original iPad and saw how much nicer it is to consume information on than a computer. I've since upgraded to an iPad 2 and will upgrade to an iPad 3. I use it more than my much more expensive and very nice computer.
Computer for content creation, iPad for everything else.

ward09 says:

Again, I want to give you a "thumbs up". Rene, what's the deal bro? Can't we make this happen?

jdmoore1981 says:

I plan on buying one this year. But I want to see if Verizon is going to do data sharing first if not I will buy the wifi model. Cause I can always tether from my iPhone.

sting7k says:

I think I am more interested to see if they keep the iPad 2 around instead of the iPad 3 really. I am eying it to get my elderly relatives online to keep them off my back about never calling on the phone.

Shameer m. says:

If they do keep it around I don't see it dropping below $399.

Shameer M. says:

Sure, if they have 8GB of storage and/or drop the cameras.

Shameer m. says:

I'm with you. Give me retina & 1GB of RAM & I'm in. Everything else is icing on the cake.

cardfan says:

Retina is the big draw but a combo of things like better cameras, LTE, quad core, and MS Office would seal the deal. Yep, ipad 3 will draw mass upgrades.

sangs says:

I could give an apple core about including LTE, 4G whatever. I bought the 1st generation with Wifi and 3G and used the 3G connection exactly once. Turns out, wifi is pretty much everywhere. Huge waste of money. And as much as I love my iPad, it's time to move on up to the next version. I'll be upgrading to whatever they give us.

jrsharp70 says:

I think that upgrading ones iPad will be like upgrading a computer. People will start to upgrade when they need to, and successive generations will not make the most recent iteration obsolete. I think this is a good strategy. I may get a gen 3, but only because they hold value so well that I can sell my gen 2 for $350 still!

Chris says:

As an iPad 1 owner (that didn't see enough improvement in the iPad 2 to make me want to upgrade), I can tell you that the number one thing I'm looking for in the next iPad is the Retina Display.
4G or the lack thereof isn't a deal killer for me - when I picked up my iPad 1, I got the big boy (64GB 3G) - but after two months of the built-in 3G, I picked up a 4G mobile hotspot and haven't used the built-in 3G since. I'll probably just go with a wifi-only model this time around.
I'm also not looking for a 7" model - I like the screen size of the original/current iPad (although something more HD-like similar to the Samsung Galaxy Tab screen form factor might be a little better).
These are just my views - your mileage may vary.

Juan says:

Don't change the form factor!!!
I don't want a 16:9 tablet, as much as I am a 16:9 pusher for my TV and PC (ie I only watch shows that are in HD).
For the tablet, there are functions that are better upright, and functions better sideways. The 4:3 is still the right blend.
16:9 Tablets upright suck. I've played extensively with a Galaxy Tab 10.1 and holding it upright for normal browsing stinks.

Damitol says:

I haven't owned my iPad 2 that long, and I'm quite pleased with everything it does, so I'll wait for 4. Yes, it would be awesome to have the new display, but I've been seriously evaluating the iPad vs. my iPhone since iPad Retina was pretty much confirmed, and while the difference is noticeable, it's not night and day. The other known upgrades are cool, but just not enough for me to lose money on my 2. Maybe 4 will bring 3D to the table, and seal the deal for me.

Chris says:

I've never found big value or interest in 3D - I have a feeling it's going to end up being a fad similar to the short life of the "netbook".

Carioca32 says:

Apple has no plans to be dominant or to own any market, they just want to be dominant in profits. Apple has taken a permanent second place to Android in the smartphone segment, and has seen its tablet lead dwindle from 80 to 60% in just one year. Give it one or two years, Android will be leading the tablet market as well, but none of it matters, as long as no individual maker sells more than Apple.
Apple will sell record iPad 3s, and it does not have to own mobile computing to be heavily profitable.

gtobynj says:

I didn't upgrade from iPad to iPad2 (though I got one through work - yay) and the reason I didn't upgrade was that the screen wasn't improved. I won't be first in line for an iPad3 if it has the Retina display, but I will be in that line even if it doesn't have 4G, though I will be sorely disappointed.

Georgia says:

It's going to have to look different for me to upgrade. If people can't notice me, there is no point.

KingPrawn says:

The best thing is already here, it's called an iPad. The whole experience is not the retina display and faster chips! You'll be checking your mail and updating your calendars that same night you go home with it really lol.
Be above the hype!