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Report: iPad 2 May Drop to $299 After iPad 3 Launch

Last week brought reports that Apple plans to reveal two versions of the iPad 3 this month during the Macworld/iWorld expo scheduled for January 26-28, 2012, in San Francisco. Both will reportedly offer the same 9.7-inch QXGA screen (1536 x 2048) and A6 SoC, but one model will sport a 5MP camera whereas the other will feature an 8MP camera. These will serve as new mid-range and high-end tablets in Apple's iPad lineup.

As for the low-end/entry-level model, this will be Apple's current iPad 2, according to sources at Apple's supply chain partners. We speculated that it will be re-launched with a lower pricetag than what's offered now, and even suggested that Apple may introduce an 8 GB model to put Apple in a better position to compete with Amazon, Barnes & Noble and even Archos in the $199 tablet market.

However on Tuesday sources from Apple's supply chain clarified that the high-end 8MP iPad 3 will have the high resolution QXGA panel (2048 x 1536) and the 5MP mid-tier model will have the same XGA panel offered with the iPad 2 which comes with a 1024 x 768 resolution. That means Apple would essentially offer an iPad with a A5 SoC, XGA panel and a 0.3MP camera, an iPad with an A6 SoC, XGA panel and 5MP camera, and an iPad with an A6 SoC, QXGA panel and 8MP camera.

As for pricing, there's speculation that the Wi-Fi iPad 2 could sell for as low as $299 USD. Currently Apple offers three iPad 2 Wi-Fi only models: $499 for 16 GB, $599 for 32 GB and $699 for 64 GB. While it's possible that Apple may knock $200 off the price of its 16 GB model, providing an 8 GB version with a low price point seems more likely.

Will a $299 iPad tablet be competitive in a $199 tablet market? For many consumers, the $100 price gap between the Kindle Fire and the possible $299 iPad 2 may be too wide. Another problem Apple may have in competing with Amazon's Kindle Fire is that it's essentially the only Android tablet that allows consumers to purchase and stream video content directly to the device -- Google's Android Market only provides rentals (Ultraviolet doesn't count yet, sorry).

Amazon also stays competitive with the Android Market, offering a free Android app each day while countering Android Market promotions like the $4.99 albums and 0.99 EA games. To some degree Amazon and Google are tag-teaming against Apple, both providing cloud storage for video, music and ebook purchases (except for the Green Lantern license which ends in March doh). However in the long run, both Android and iOS have their strengths and weaknesses -- consumers simply need to weigh each against how much they're willing to spend.