TUAW has just posted a rather interesting theory about what will happen to the original iPad once the iPad 2 is released in the next few months: they suggest that the iPad will be handled more like the iPhone than the Mac, and the previous generation iPad will still be sold for another year as the “budget” model, similar to the way the iPhone 3GS is still sold by AT&T as the sub-$100 iPhone.
Under this theory, the iPad range might start at a $399 price point for the original iPad with WiFi. It’s an intriguing thought, but I tend to doubt it, for one reason: Apple selling the previous gen iPhone as a budget model has more to do with the carriers than Apple itself.
The sub-$100 phone market is a big one. There’s a lot of customers out there who want a smartphone, but don’t want to spend a few hundred dollars upfront for one. The last-gen iPhone option allows carriers to pull these customers in with the promise of a “cheap” iPhone, but that cheapness is mostly an illusion: the two year contract allows the carriers to make a tidy profit on the cost of that iPhone in the end, probably equal or greater to the profit they make on a current-gen iPhone.
Without subsidies, keeping the last gen iPad around doesn’t make much sense. It’s worth noting that Apple kept the second-gen iPod Touch around as the entry-level model when the third-gen Touch hit, but Apple’s since abandoned that tack (and it’s worth noting that the second-gen and third-gen iPod Touch were identical in almost every way except their processors, meaning most customers weren’t aware they were different products).
One thing that seems certain is that the iPad 2 will be a radically different beast than its predecessor. Without subsidies to influence the decision, I’m not sure that keeping the current-gen iPad around makes much sense. What do you guys think?