The iPad Will Hurt Your Wallet in Time, but in a Good Way

iPad

We mentioned how astonishing the entry price point for the iPad is, and how it might be its killer feature. But thinking about it, Apple's pulling off a magic trick that is going to cost you plenty of dollars over the next couple of years.

The raw unit pricing of the iPad is shown in the screengrab from Apple above—there's that magic $499 starting price (just $10 more than a Kindle DX) staring right at you. But that's the basic 16GB version, yes? Doubling the storage to the 32GB version will cost you $599, and doubling that to 64GB will take it to $699. And that's starting to sound pricey—but remember the much more expensive MacBookAir, trading on its revolutionary super-skinny unibody aluminum design, originally came with just 74GB of hard drive space (using Apple's new 10th power system for GBs).

The 3G units, which also include GPS, are $130 more across the line making them cost $629, $729 and $829 respectively. The low point is still reasonably affordable (and it's actually not much more than my 32GB iPhone 3GS cost me over here in Europe—it's pay as you go, hence there's no carrier subsidy.) But that top price of over $800 is reaching towards the entry level MacBook's price, and it's undeniably expensive. For the dollars you do get a GPS navigation system with an unprecedented 9.7-inch screen, and enough on-board storage for entertainment for a week of vacationing away from your home's hard drives.

Don't forget data though: In the U.S. we know that's $14.99 a month from AT&T for 250MB, and $29.99 for an unlimited plan. It's contract-free though, which won't amaze us Europeans, but is pretty astonishing for you guys on the other side of the Atlantic.

How much does that add up to for, let's say, the first year of ownership? Assuming you go for the cheapest option without 3G you'll spend just $499. If you go for the cheapest 3G unit, and buy data every month for a year it'll cost you a grand total of $808.88—less than top-end iPad's unit price. Buy that one, and add an all-you-can-eat data plan and you'll spend $1,188.88. Which is a lot.

But wait. Here's where Apple's magic trick occurs: This is iPad 1.0. It's amazing, it's a game-changer, it'll sell by the million. But you know that next year the iPad 1.0 line will get trimmed to a few models, and a price slash. Because iPad 2.0 will be out. With double the storage, with a camera (not a big omission in my mind, but your mileage may vary), with a speedier Apple A5 processor aboard, with better battery life, stereo speakers, extra whoofle-dust sprinklings and a built-in kitchen sink.

iPad

Its inevitable, it's typically Apple—which followed this business model for the iPhone—and it's typical for electronics. But you know that you're going to want the 2.0 even if you bought the 1.0, since you'll be seduced by its power, and by how much fun you had with the first version. And since you're not in a data contract you'll buy one, for probably the same price you paid for the 1.0. You might even spring for more storage inside, or a 3G one if you didn't get that before. And then there are accessories...

The same will happen in 2012 too, when the iPad 4G comes out, stuffed with LTE goodness, cameras and god knows what else Apple's squeezed into its chassis. If you go for the cheapest option every year, you might spend just $1,500. But if you're a gadget geek with deep pockets you could end up forking over $3,600 to Apple and AT&T. You'll probably have enjoyed the experience a whole bunch, though.

Clever Apple, eh?

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10 Comments

  • Dustin Nohr

    @tyler

    I hope this is an op-ed piece. Everything Kit lists under the graphic on the screen is his opnion (and the paragraph before the graphic).

    A quote like "Here's where Apple's magic trick occurs". Maybe this could be better phrased like "Here's where Ford/Microsoft/Gucci/Fossil/Toyota/GM/HP/CISCO/Apple/..... magic trick".

    Instead of thinking how good the version 2 or version 3 or version X is going to be why don't you think about the current one. Sounds like Kit and maybe you tyler might want an iPad (just not right now). The only way you are going to get a version 2 is if version 1 is successful.

    But what do i know?

  • Tyler Adams

    @Angry guy, you're kidding right? You don't need to be an Apple Insider to know there is going to be a 2nd gen iPad. I personally don't see why the majority of people would want this right now anyway. For most people, it doesn't do anything that we can't already do on our iPhones/laptops, and it isn't revolutionary enough to make us "need" this the same way we "needed" an iPod when it was first introduced. However, future generations might include enough features to make this a "necessity" or they might make the 1st generation cheap enough to warrant buying something that we really don't need. If Kit's version of the 2012 iPad were available now for $500 i'd be in line to buy one...until then, I already have an iPad, only smaller: the iPod touch.

  • Tyler Adams

    @Angry guy, you're kidding right? You don't need to be an Apple Insider to know there is going to be a 2nd gen iPad. I personally don't see why the majority of people would want this right now anyway. For most people, it doesn't do anything that we can't already do on our iPhones/laptops, and it isn't revolutionary enough to make us "need" this the same way we "needed" an iPod when it was first introduced. However, future generations might include enough features to make this a "necessity" or they might make the 1st generation cheap enough to warrant buying something that really need. If Kit's version of the 2012 iPad were available now for $500 i'd be in line to buy one...until then, I already have an iPad: the iPod touch.

  • Gregory Ferenstein

    I'm excited to see the pricing structure with the publishing industry. This could potentially replace textbooks on college campus. At +$100 a book per class, $500 doesn't seem so much.

    --
    @ferenstein

  • Scott Doty

    Kit, thanks for breaking it down for us.

    I am personally wary of how monthly fees add up. Last year I went through my credit card statements and picked out as many monthly services as I could and canceled them. We have saved over 100 dollars a month and I honestly don’t miss any of these services. [No, I didn’t cancel Netflix. I’m not crazy.]

    That being said, I believe this device may prove to be a great value for business users even with the full data plan. It’s simply a pain to lug a laptop along for short business trips. Many choose to use their smart phone, but if they could replace the obligatory business books in their bag with the Ipad, I believe they will find themselves using email on their cell less. Besides, won’t this thing boot up faster than a netbook?

    Admittedly, I am not a typical user. I have had a convertible tablet PC for the past 5 years and I find it indispensible for rendering concept sketches. I also use it for email and presenting my portfolio and works in progress to clients. The painting software that they showed in Job’s keynote looked amazing. [I am an industrial designer.] When my tablet needs replacing, the Ipad is now at the top of my list. The $499 model, of course.

  • Dustin Nohr

    Kit I agree with most of your article. But when you start complaining about iPad version 1 and there might be a version 2. Are you kidding me? Are you an apple insider that knows there is going to be a version 2? Sometimes I go to the bakery and I get bread. Lets call the fresh bread version 1. Well guess what I can save a little money and wait for version 1 (fresh bread) to turn into version 2 bread (day old). Improving on a product is a good thing not a bad thing.

    Your complaint over version 1 and version 2 is in almost every other market like lets see
    cars
    tvs
    cell phones
    video games
    books
    movies
    everything that has a computer in it (which is just about everything now a days)

    Congrats to you made me so angry I had to log in to a site I no longer use to tell you how wrong you are!

  • Terrill Welch

    I'm not a geeky gadget hound by any stretch of the imagination. I have ignored iphones and ipods and I don't "text." My cell phone is used for MY emergencies. But this ipad is appealing to me. I've a wordpress blog, twitter and facebook accounts. I live on an island and travel by ferry frequently. Ipad seems like it would be great for some of my access challenges when traveling (without turning numbers into an alphabet or having to drag my laptop along). I might even buy more than a really need for storage just to be sure I had enough. So as a non-techi - Apple has my attention.

  • Carlos Lorenzo

    Collecting gadgets must be classified as an addiction and they play with us in that sense. Oh, yeah, I'll take that iPad. No, no, the big one. Make them two. And an iphone. They look so pretty and make me look so important. It's from Apple you know. Look man, mine's got 3G, know what I mean? And as you suggest, next year you go with the syndrome to the store for more. And then Google invents the GPad and you have to go to rehab :)

  • Kit Eaton

    @Brian. Yup--its pricing is absolutely key, and it's way lower than naysayers were predicting ($2000 remember? Even the WSJ "leak" had it at $1,000). This thing has a 10-inch touchscreen and a solid state hard drive...stick those in a netbook, and it'd cost close to $500. But it's not about "more functionality for $200 less"--it's about the synthesis of so many features into one clean device. It worked for the iPod, it worked for the iPhone. It will most likely work for the iPad too--though you probably won't buy one, millions will.

  • Brian Bittner

    Really...you think the price is the biggest win? Please...you can get more functionallity for $200 less. I certainly won't be buying this one or the next one or the one after that. Well not until they get the price down to a price point thats inline with a netbook.