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Apple delivers a one-two punch to knock out tablet competition

The new iPad introduced by Apple yesterday has some nifty new features such as a super high-resolution display and 4G access. Combined with the announcement of a price reduction for the iPad 2, Apple is clearly moving to shore up its dominance at the high-end of the tablet market while also moving to address the quickly-growing lower-priced segment where it had not previously been a player.

Apple has already sold more than 55 million iPads worldwide to date and the higher resolution and bandwidths of the latest iPad should do a good job of attracting users who want to watch movies, play games and otherwise access digital content on their couches or while on the go. The new price of $399 for the iPad 2 16GB WiFi could also attract consumers who might have been considering a Kindle Fire.

?I think this by itself may not be the home run, but combined with keeping the iPad 2 at a lower price point, this will enable Apple to preserve or slow down loss of share,? said Chia Chen, senior vice president of the mobile practice at Digitas, Boston.

?Apple cannot help but notice the fact that at $200, the Kindle Fire has gotten people to go and buy it,? he said. ?By lowering the price point on the iPad 2, which has a bigger screen and a little bit more capabilities than the Kindle Fire, this will make some people who are thinking about a Kindle Fire consider an iPad 2 instead.?

Looking good
Similarly, Apple lowered the price of older model iPhone devices when it launched the iPhone 4S in the fall.

The move shows that the company is noticing the growing competition from lower-priced tablets such as the Kindle Fire from Amazon, which carries a starting price of $199 and is geared for media consumption.

Amazon's Kindle Fire has helped attract new consumers to the tablet category.

The new pricing strategy could help to further spur already strong iPad sales.

In a recent survey from InMobi, one third of respondents said they are planning to buy the new iPad and over half of those who are planning to buy it do not own a tablet. Additionally, 51 percent of respondents said they would purchase the new iPad for entertainment over business or education.

?Of the 65 percent of those we surveyed who planned to buy a new iPad saying they would also consider buying an iPad or iPad 2 at a reduced price instead, we expect increased penetration by Apple into the tablet market ,? said Anne Frisbie, vice president and managing director, North America at InMobi, San Mateo, CA.

The new iPad features Retina display, giving it significantly higher resolution that previous versions.

It will be available in the Wi-Fi version priced at $499 for 16 GB, $599 for 32 GB and $699 for 64 GB.

There will also be a version that connects to 4G networks, a first for the iPad. Prices for the 4G LTE version are $629 for 16GB, $729 for 32GB and $829 for 64GB.

The new iPad will be available on AT&T and Verizon on March 16.

?This is a pretty significant advancement from a creative standpoint,? Digitas? Mr. Chen said. ?The new iPad has an incredibly high-resolution screen ? stuff will look beautiful.

?With the better bandwidth and amazing display, it is really going to be opening up the canvas to do things that are a lot richer,? he said.

Post-PC era
The ability to deliver high quality images could be an important advantage for retailers and fashion designers who are looking to market their products via the iPad.

The resolution in the new iPad is so good that users will be able to zoom in on fashion items, for example, and see the fibers, per Scott Michaels, vice president at Atimi Software, Vancouver, Canada.

?The ability to have high quality images will have a positive impact,? Mr. Michaels said. ?People like to pinch and zoom.

?This might contribute to a bump in iPad-based sales if people are going to take advantage of the new higher resolution.?

In recognition of the fact that developers may want to take advantage of the new iPad?s higher resolution and 4G capability by delivering richer experiences, Apple increased the over-the-air download limit for the App Store to 50MB, up from 20MB.

During Apple's presentation yesterday, the company also highlighted the fact that it sold 15.4 million iPads in the last quarter, which is more than any PC manufacturer sold PCs.

?When we look at how people are using tablets, they are using them when they would have previously gone to PCs to browse content,? Digitas? Mr. Chen said. ?When you are thinking about connecting with people via digital, you have to think about it in a post-PC, tablet or mobile-first perspective.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York