Why Today’s Education Announcements Means The Sub-$299 iPad Is Coming Soon [Opinion]



Today’s Education Event at the Guggenheim in New York City was by all reports supposed to be “demure,” but that didn’t stop Apple from making a big splash. In fact, today’s event may have marked the most concerted attempt by Apple to revolutionize the classroom since the original Apple IIe.

Among today’s announcements? A new version of iBooks that makes textbooks on an iPad fully interactive, along with free authoring tools so easy-to-use and revolutionary that literally any author can create a beautifully formatted interactive e-book. Coupled with iTunes U — perhaps the most comprehensive classroom learning software ever — and a pledge to keep the price of all textbooks at $14.99, Apple’s goals are clear: they want to get an iPad in the hands of every student in the country.

There’s only one problem, right now: the lack of a budget iPad. It’s a problem Apple can (and should) fix.

If there’s one thing that the success of the $199 Kindle Fire has shown, it’s that Apple could expand marketshare enormously with a cheaper iPad. Today’s Education Event just showed how sorely it’s needed: Apple has laid all of the groundwork to revolutionize the classroom from Kindergarten right on up to Higher Ed, but until they can make an iPad cheap enough to be a no-brainer purchase by every parent, student and public school administration, the biggest barrier to entry is going to be iPad penetration.

For college students, the choice to pick up an iPad freshman year might be a no-brainer. After all, with e-textbooks at just $14.99, even the addition of a $499 iPad to the bill is going to save students money in the long run. College textbooks are expensive.

But one thing Apple made clear is that they also want the iPad to be the default learning tool for students from Kindergarten to Twelfth Grade… and there are s a lot fewer parents or even public school systems who can afford laying out $499 on an easily-broken slab of aluminum and glass, just to get kids to read their biology. Unless Apple can lower the price of the iPad so that most parents and public schools can afford them, Apple’s going to go nowhere in pre-Higher Education.

The good news, though, is that with today’s announcements, Apple may have already tipped their hand that a cheaper iPad is coming.

For the last month or two, rumors have persisted that when the Retina Display iPad 3 comes out, they will drop the price of the iPad 2 to just $299 for an 8GB or 16GB WiFI-only model, similar to the way the iPhone 4 and iPhone 3GS are less expensive compared to the iPhone 4S.

If Apple then sells the iPad 2 at a subsidy to school districts. When the iPad 2 first came out, a $499 16GB model cost Apple about $326 to build, a 35% markup. If Apple can manage the same profit yield on a $299 iPad 2 by March of this year, Cupertino could conceivably sell iPads to schools for less than $200 without taking a loss.

That would be great for both Apple and the schools. Most high school textbooks cost about $200 to replace, so a $200 iPad that can take the place of many textbooks is a budget saver. On the other hand, while Apple may have to sell the $299 iPad 2 at a subsidized price, they’ll make up the difference (and more) by selling textbooks to school districts. Win win.

At today’s event, Apple said that education was in their DNA. Fair enough, but the sad reality is that the DNA of America’s public schools is mostly about economy and cost. Until Apple can deliver an iPad 2 into every child’s hands for the same price as a new textbook, their initiative to get back into K-12 classrooms can’t take off. Luckily, though, it looks like Apple might already be looking to do just that.

  • iAidan

    why would schools buy that, when they can buy a good windows computer for the same price?

  • Aj Tk427

    who’s going to read text book at a window’s computer?  ha, not sure why I’m even commenting against your comment since it’s totally ridiculous.

  • John S. Wilson

    Aidan, more functionality, more portability, higher cool factor (which could translate to kids using it more, and for the right reasons), and higher resale value. A lot of reasons.

  • Aj Tk427

    It’s definitely going to be a big challenge, however if they achieve it, it basically game over for tablet dominance.

  • CaveMan5464

    Why was his comment so dumb? First of all what an oxymoron?!? Good windows computer?! HA! :)

    But seriously tho, no one can argue the portability of a tablet.

  • techgeek01

    He brings up a very good point. Students will need a device to type on.  A touch display is in no way a substitute for an actual keyboard. Granted you can get a keyboard for your iPad. But two issues there. You have to throw out a significant amount to get a keyboard.  Secondly it’s another thing to lose and the last thing a teacher wants to hear is “I forgot my keyboard.”

    And what about the software?  I know in certain classes they have particular that they need. 

    HP has a small portable laptop for $400. (Granted it will be less in mass purchase)
    And has a battery life like the iPad.  Keyboard and windows.  Meaning it can run the full Microsoft office suite and about any other program that is needed for class. Which you can’t say with an iPad.

    That being said, I don’t very many schools that have the money to get any device (iPad or laptop) for their students. 

  • Aj Tk427

    But then you have the laptop on your books, back to square one.  You could technically get a case with a built in keyboard.

    Nothing stopping a publishing company from releasing a book application for a laptop, but none have because the all know it wouldn’t work.

  • Louie Gluefish

    The textbook industry has been asking for it for years.  It’s a crime what they have been charging lately.  $200 a textbook is highway robbery.  It reminds me of the $200 per bolt price we heard GSA was paying years ago…  it’s one thing that keeps people from going back to school: I have heard of having to pay over a thousand dollars for books for a semester’s study.

  • Louie Gluefish

    Bluetooth KB’s that run on iPad can be found for under $40

  • FriarNurgle

    They would likely strip out the camera as taking photos in school is a rather large no no. Sure they could disable them, but it will be sans camera to hit a rock bottom price point the schools need…. IMO

  • Shameer Mulji

    Here’s a theory – Maybe Apple will keep the iPad 1 & iPad 2 for sale when iPad 3 is announced.  Here’s a an example of what pricing structures could look like in light of today’s announcements;

    iPad 1(16GB) – $299

    iPad 2(16GB & 32GB) – $399 & $499

    iPad 3 (32GB & 64GB) – $599 & $699

    Of course these are only Wi-Fi versions.

  • Nathan Glass

    A friend of mine, a returning college student, just spent $800 for TWO BOOKS! No doubt those two books will be “obsolete” as soon as he is finished with them.

  • Bob Patterson

    Maybe one way to consider the economics, both from the school and the student, is to consider the savings over a 2-3 year period of the iBook vs. traditional text books. 

    Student: Consider a typical semester at college – 4 courses with at least one $100 text book, or $400/semester. If the second semester added another textbook (different class), we are up to $500. The same cost for Ebooks at $15 ea would be $75 for 5 courses or a “savings” of $325. The payback, even for the existing iPad would be 2 years or less. This would not even include the cost/benefit of iTunes U as a complement to Ebooks. Maybe, if Apple provides iPads with only Wifi and no camera, the payback might even be reduced to 1 year, assuming no educational discounts!

    School: This is harder to judge since many schools consider book sales as a profit center. But, I suspect that the margins are quite slim and the intangible benefits of Ebooks (no storage, handling, FTE, etc) could be quantified to make the case for Ebooks from the institution’s perspective. 

    As a businessman, I have been using and iPad since they first came out to bring reports (40-50 pages in color) and other materials when I travel, do presentations, and communicate while on the road. Just in the cost of paper alone, I have saved a bundle!

  • ddevito

    because students can’t put a desktop computer in their school bag  :)

  • Shameer Mulji

    from what I understand, this initial textbook initiative by Apple targets K-12 schools.  Textbook initiatives for higher education, I assume, is in the works.

  • Shaps816

    iPad has iWork as alternative to Office, and would meet the needs for students. Not to mention the endless possibilities of education-related apps a teacher may want to use…

    As to your point:  Sure, buy a small HP laptop for $400, then add in Office Suite $150, oh..and then add untold $$ for books again…seems like that’s all been possible for years now and hasn’t worked out too well, has it?

  • CharliK

    The iPad 1 isn’t on sale anymore, production was cut when the iPad 2 came out. They won’t bother bringing it back. 

    and if they keep the iPad 2 around it will likely only be the 16GB as a 32GB iPad 2 would cut into iPad 3 sales of that size. Unless they intend to cut production on new wifi only models and just do the wifi+3g ones which I suspect will happen eventually. In which case yes they might keep last years wifi models going with a $100-150 discount. They might also add an additional discount if schools are bulk buying several hundred to either loan to students or resell at cost. 

  • CharliK

    smaller fingers have less trouble with the soft keyboard and with it present no child can ever say “I forgot my keyboard” if they left their bluetooth one at home. Rather like they can’t use “I forgot my stylus” since the iPad works without requiring one. 

  • Jackson

    This is why Apple is exploring the 8-inch iPad.  It would be easier for kids to hold and provide that cheaper price point. Unfortunately, like all iPads, you can only read it inside or at night. More changes needed to the display. Won’t happen this year.