The Argument for the iPad 2

John Gruber addresses what many were thinking after Apple’s last announcement. Apple unveiled the small iPad mini at 7 inches for $329 and a new, new iPad for $499 replacing the old 3rd Generation New iPad. Why did they keep the iPad 2 around!?

I was confused by this at first. Why keep the iPad 2 around? Then the answer hit me: the iPad 2 must have continued to sell well over the last seven months. There can be no other explanation. If it weren’t selling well, Apple would have dropped it from the lineup. But because it isselling well, they’re keeping it in the lineup, because they don’t know whyit’s selling well. If it’s only because of the lower price, the iPad Mini might obviate it. But perhaps it’s not that people want the least expensive iPad, but instead that they want the least expensive full-size iPad.

But the key is that the iPad 2’s non-retina display has not kept it from selling well alongside the retina iPad 3. For many people, retina resolution is nice-to-have, not must-have.

I think John is not incorrect, but is also overlooking something pretty obvious from a business perspective. (which I forgive because he is a tech writer) The new iPad mini has essentially the same internals as the iPad 2 – it runs the A5 processor, and runs at non-retina display resolution, just like the iPad2. This means Apple is essentially producing the same internals as the iPad 2. It costs them almost nothing to keep the iPad 2 around as a nice “big screen on a budget”. Instead of putting the more expensive retina chips in a price reduced iPad3, they can keep those in the higher revenue generating iPad 4.

This is simply another rational business decision that shows Tim Cook’s influence on the company. Just like his productivity efficiencies and large orders on flash and high quality displays to drive costs down and keep out competitors – smart business decisions that raise the bottom line for Apple.

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