Would you want an iPad that, like the newly announced Amazon Kindle discount, is subsidized by advertising? Now the new Kindle is only $25 (?!) cheaper which isn't really a big enough subsidy in my opinion but what if the numbers were more interesting, like $100 off, $200 off, $300 off, or even free with iAds? Is there a discount level appealing enough that you'd put up with an iAd banner at the bottom of your home screen or 15 seconds of pre-roll several times an hour when you launch an app?
If you buy an iPad for $499 or up you pay once and the device is yours forever. If you get a cheaper or even free iPad you save once but pay with your attention and personal information forever. With carrier subsidies for the iPhone, North Americans have shown time and again we'd rather save money up front even if we get locked into a 2 or 3 year contract that ends up costing us thousands of dollars. Would advertising be just one more way to save up front?
And do you think Apple would ever go there or is that more a Google, and now Amazon play?