Is Apple giving up on tablets, or is the new iPad a smart business move at $330?


As you can see from the chart above, the tablet market is far from its heydays, and its growth is expected to stall for the sake of laptops, which are projected to grow in shipments. There are several reasons for that - people who got tablets in 2013 and 2014 are still keeping them around, and customers in the market for a computing device other than a smartphone now have much better choices in thin and light laptops. You can, for instance, now get the new LG Gram 13" laptop that weighs two pounds, or about as much as a tablet with a keyboard cover, but has larger screen, lasts 15 hours on a charge, and offers more storage.

Apple has undoubtedly taken notice of these developments, that is why it unveiled a new 9.7" iPad the other day, two and a half years after its last Air 2 slate, with a simple press release, eschewing the usual on-stage fanfare. The new iPad 9.7", however, starts at just $329, whereas all of Apple's 10-inchers before it were $499 at their basic config. Given that Apple commands a quarter of the tablet market, and practically all of the high-end segment, the new iPad will inevitably start crowding out the competition. We gave the LG Gram example above to showcase how the new thin and light laptops can be more compelling than a tablet+keyboard combo, but there's one important caveat - you  can't get the Gram for $330. The most you can get at that price would be a Chromebook, and that might be what Apple is targeting here, as Google's pseudo-laptops are wiggling their way in the education realm, encroaching on Apple's educational focus for iPads.

Will Apple still make money from the iPad at $329, though? Don't worry, when the iPad Air 2 launched two and a half years ago, IHS estimates pegged the cost of its components and assembly at $275. The nature of the electronics' industry is that cost of components falls drastically over time, and the only upgrades worth talking about in the new iPad, compared to the Air 2, are a faster, A9 chipset, a "brighter Retina Display," and a new Touch ID finger scanner. Furthermore, given that the new iPad won't have the laminated display tech and anti-reflective coating of its predecessor, we wouldn't be surprised if the total cost to make this thing now hovers around the $150 mark. Thus, the new slate still offers a decent margin in terms of pure hardware, but let's not forget that Apple also makes bank on apps and subscription services. 

This "service" business at Apple is growing much faster in revenue than the rest of its portfolio. The App Store, Apple Music, iCloud, iTunes, Apple Pay transaction fees, and so on, hauled in no less than $6.325 billion in Q3, which is a 20% increase year-on-year, and the profit margin from those is pretty high. Thus, the more iOS devices Apple gets in the hands of users, the more money it will make on the accompanying apps and media consumption from its software ecosystem over time. That is why we wanted to ask you if you think that a $329 iPad is just Apple acknowledging the challenges in the tablet market, and throwing in the towel by cutting prices, or is it a smart business move to capitalize on its ever-increasing revenue from apps and services? Needless to say, the two reasons for getting a crazy cheap iPad this season aren't mutually exclusive, so why not a little bit of both? Check your opinion below, and argue it in the comments.

Is Apple giving up on tablets, or is the new iPad a smart business move at $330?

Giving up on tablets
12.68%
Smart business decision
53.92%
A bit of both
33.4%

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iPad 9.7-inch
  • Display 9.7" 1536 x 2048 pixels
  • Camera 8 MP / 1.2 MP front
  • Processor Apple A9, Dual-core, 1850 MHz
  • Battery 8827 mAh

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37 Comments

1. Martineverest

Posts: 521; Member since: Oct 27, 2015

they are trying to get the education sector with cheaper tablets that will rival chromebooks and windows cloud OS devices.....this is another sign that ipad is going extinction

4. kiko007

Posts: 7493; Member since: Feb 17, 2016

I think you need to define extinction for me. From what I gather, you're most certainly using that word improperly.

37. sgodsell

Posts: 7164; Member since: Mar 16, 2013

As with all things time is catching up with tablets. Especially when phablets can do many of the functions of tablets. They have split screen multitasking. They even have stylus pens if you want that as well. Plus with both iOS and Android their tablet version can run many of their phone apps. For instance smartphones and phablets still have a few legs to stand on, and even surpass tablets. They are more convenient and easier to carry. Plus they are small enough that they can be used for things like VR/AR/MR. I know kiko007 how you feel on VR, especially when you told me that VR is a gimmick right now. However It's just a matter of time when others will finally see what I have seen with VR/AR/MR. Especially when smartphones are going to have 4k displays. Some even do right now like Sony's Xperia Z5 premium, and now the XZ premium. There is even some VR headsets like the pimax with dual 4k displays​. NASA is looking at VR/AR to replace all those console displays that a mission controller would use. With a VR headset a user could have six or more displays, and they could quickly turn their head side to side, or move their head up and down to view different console displays. A VR headset can technically replace a number of computer screens. So why not a tablet screen as well, especially when 4k or higher resolution displays are coming in the future to a number of smartphones. The S8 note is rumored to have a 4k display. There is even some VR demo cad drawing apps that actually let's users draw poly lines, circles, and more. Just like you find in AutoCAD. Many like you think this is years away. But you should know its much closer than you think.

2. kiko007

Posts: 7493; Member since: Feb 17, 2016

The answer is a bit of both. They may be coming out with new models every year, but they are not as substantial change wise as in years prior, and it's become rather obvious that Apple would rather focus on the iPhone and improving services. Having said that, an iPad at that price is a steal. At that price point, there is almost zero legitimate competition within the tablet market. You can either get an Android tablet, or a used Surface (maybe). I'd imagine people avoid the former as a result of lacking support, and the latter due to age. As a result, there is a wide open market for Apple to take advantage of if they play their cards properly.

5. jeroome86

Posts: 2314; Member since: Apr 12, 2012

Careful with your facts. A self proclaim tech expert will have his on data and so call make believe facts. That's if he ever healed from the ambush he took yesterday.

10. kiko007

Posts: 7493; Member since: Feb 17, 2016

If he shows up, he'll get devoured like he did yesterday. I hope he lays low for a while.... healing his pride and all that. However, I doubt that'll happen.... because he's THE expert!

21. Bernoulli

Posts: 4359; Member since: Sep 01, 2012

Wait I missed that, what article was it on?

26. TechieXP1969

Posts: 14967; Member since: Sep 25, 2013

I didnt get knocked down yesterday. I am entitled to my opinion. I dont care what some snot nose brat basement hound-dog has to say about my opinion. I never give to phucks about what anyone says about me. Especially coming from someone who is so fanatic, even when you say nothign bad about any company, they still rise up. I;m not concerned about the kids here. I will continue to do my thing. I never back down, especially when I know I am right.

29. mikehunta727 unregistered

You are entitled to your own opinion absolutely, but doesn't mean your opinion is right or factual/objective/reality

31. Bernoulli

Posts: 4359; Member since: Sep 01, 2012

Dude why did you reply to me? Especially when you know I won't read your s**t if it's over 4 sentences.

3. buccob

Posts: 2963; Member since: Jun 19, 2012

It's a smart move for them when it's a dumb move from the customers...

7. bucky

Posts: 3775; Member since: Sep 30, 2009

Why is that? It's a cheaper price for a great tablet that will certainly last years without problems.

23. buccob

Posts: 2963; Member since: Jun 19, 2012

Still overpriced for basically an ipad Air 1...

6. nebula

Posts: 1009; Member since: Feb 20, 2015

I believe a little overpriced if compete in education sector to Chromebook. It lacks versatility, keyboard, storage. Basically essentials to say.

8. bucky

Posts: 3775; Member since: Sep 30, 2009

I think Apple needs to get on with merging iOS with Mac OS. Without a file manager and USB functionality it will never be a 100% replacement for a full OS.

22. Bernoulli

Posts: 4359; Member since: Sep 01, 2012

Um it does offer a file manager, what osx version did you use?

30. hurrycanger

Posts: 1759; Member since: Dec 01, 2013

He was talking about iOS

32. Bernoulli

Posts: 4359; Member since: Sep 01, 2012

But if he was android isn't a full OS either when they've never mass produced a PC, and if you want to say Linux well... it's got no support at all.

9. geordie8t1

Posts: 286; Member since: Nov 16, 2015

The tablet world is saturated....people are more likely to upgrade a phone 1 year later as it's often their go to device for everything be it camera music gaming navigation social media and so on. Tablets are often commuting or stay at home devices, thus their usage is a lot less then the phones therefore people are a lot more likely to have a tablet for 2 or 3 years before upgrading given that upgrades are often incremental i.e new processor or a bit extra storage or perhaps 1mm or 2 thinner. And given the new trend of hybrid laptops it's no wonder sales are stagnating.....

11. darkkjedii

Posts: 30959; Member since: Feb 05, 2011

Smart business move. Gotta get people to jump, and nothing does that like low prices on good stuff.

12. tango_charlie

Posts: 347; Member since: Nov 16, 2011

still too expensive, since the majority of consumers are not willing to pay that much for an "average joe" tablet just to check messages, social media and surfing the web. A more aggressive price lets say 279USD would definitively appeal more consumers and would boost tablet sales.

34. AlikMalix unregistered

And an even more agrssive price of $99 will appeal to even more consumers. But even more aggressive price of $1 will appeal to even more more more consumers. Dumb argument dude.

13. SIGPRO

Posts: 2815; Member since: Oct 03, 2012

ipads are overdue! Not many people are buying them......why....because they are crap same design year in year out! Too expensive for what you get!

14. mikehunta727 unregistered

"Not many people are still buying the most sold ARM tablet on the market"* is what your saying,

15. kiko007

Posts: 7493; Member since: Feb 17, 2016

Ignore him, he's delusional.

20. SIGPRO

Posts: 2815; Member since: Oct 03, 2012

Like you i guess? Leave your apple cave for once!

24. whatev

Posts: 2193; Member since: Oct 28, 2015

Honey ask your father to buy you an iPad, I know you desperately want one to feel less of an outcast

16. maple_mak

Posts: 953; Member since: Dec 18, 2013

I just only hope that when iPad Mini series returned...

17. phonehome

Posts: 812; Member since: Dec 19, 2014

iPhone 5C but bigger

18. SleeperOne

Posts: 370; Member since: Feb 25, 2017

Even Chromebooks would make better school computers than iPads :/

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