The iPhone 5 News Blog

Apple’s iPad has dominated the tablet market mainly because of its unbeatable price-to-features ratio. But as competitors continue to undercut that advantage, Apple may bump up the price of the iPad 3 — particularly the 4G LTE version.

Apple is not known as a “price leader” in the consumer electronics sector. It isn’t as if customers say to themselves, “hey, I’m looking for a great deal on a new gadget. Think I’ll go buy an Apple product.” Granted, Apple enthusiasts will argue that Apples and Macs are indeed well worth their premium price tags, since the quality, innovation, and performance of their entire line of products is proven. Apple gear is not overpriced, by any means.

The iPad, however, has been a rare price-leading product for Apple.

Android competitors have found it quite difficult to compete with Apple’s iPad on a price-to-features basis. Both the original iPad and iPad 2 gave users an opportunity to buy into Apple’s tablet experience for only $500, and in turn they received quite a suite of features and hardware. Early rivals of iPad could match its specs, but not quite its price. (And certainly not in terms of brand buzz.)

But early on, analysts saw the iPad’s domineering position in the tablet market as gradually losing market share as the tablet market continued to develop. It would be an overstatement to say that the iPad has been a loss leader — Apple has not lost money in order to sell it (like many of its competitors) — but by keeping the price relatively low, Apple has extended its dominance over the tablet sector, perhaps at the expense of garnering fewer profits.

Now, however, smaller, cheaper tablets like the Kindle and Nook — as well as the emergence of crossover devices like the Samsung Galaxy Note — are cutting into the iPad’s market share by offer sub $500 tablets with an increased array of features. Granted, with these other tablets, you’re not getting a 9.7-inch screen and the processing power of an A5 or A6 chip — and even with the Galaxy Note, you’re essentially consolidating tablet and smartphone, which not everyone desires to do. However, the global economic downturn makes a device like the Kindle a threat to the iPad, since it could become the price-leading tablet of choice in the marketplace.

Adding to this conundrum, Apple could be seen raising the price of the iPad 3 — particularly the 4G LTE version.

Tech News Daily argues that “The next iPad could be the first Apple product to run on faster 4G cellular networks. In the past, people have bought 3G-capable iPads for backup in case Wi-Fi wasn’t available. But if the 4G rumors are true, pricier iPads could become the norm.” Quoting Peter Misek of Jefferies, they note that “Most people aren’t using the 3G feature, but buy it as a ‘security blanket’ in case they ever need to jump on the Web but don’t have Wi-Fi.”

But with true 4G, this could change, with iPad 3 users seeking to experience the Wi-Fi like speeds of 4G. And for that, Apple could greatly up the price of the 4G iPad 3. At present, the 3G iPad 2 costs $130 more than the Wi-Fi only unit. The 4G iPad 3 model could be significantly pricier.

The question remains: if Apple chooses to increase the price points of the iPad 3 — which they would most certainly have to do, considering the new hardware that is rumored to be coming along with it — what will happen to Apple’s market share in the table segment? This year will expose the truth of whether the iPad can continue to dominate, even if it is no longer the presumptive price-to-features leader.

By Michael Nace