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.