Among Apple's (AAPL 0.01%) big announcements yesterday, the company said it will keep the iPad 2 in production at the same $399 price point that it's occupied for a year and a half. That model was originally released in 2011, and its components look a little outdated in late 2013. Yet there must be a reason Apple is keeping the device around.
Localytics estimates that the iPad 2 remains the most popular model, suggesting that demand for the iPad 2 remains healthy. It would seem that a notable portion of the market is perfectly happy with a lower-resolution display and slower processor, so Apple wants to keep the device around to satisfy demand. The iPad 2's continued existence goes to show how strong Apple's pricing power is. The company can sell a tablet released in 2011 for a significant premium to newer rivals with beefier specs. On the smartphone front, Apple still sells the iPhone 4 as well for $350 in markets such as China.
In this segment of Tech Teardown, Erin Kennedy discusses Apple's new iPads with Evan Niu, CFA.
