Yesterday, Apple announced the release of their iPad 2 due to go on sale starting March 11, 2011.  There’s a plethora of reviews on the iPad 2, explaining the differences between the new upgrade.  What I’d like to help accomplish is provide a buying guide between the iPad 1, iPad 2, and rumored iPad 3.

Key Upgrades from iPad 1 and iPad 2:

• Dual-Core A5 Chip
• 33% thinner
• Front-facing camera (VGA)
• Rear-facing camera (720P)
• Gyroscope
• Improved speakers

Key Upgrades from iPad 2 to iPad 3 (rumored):

• Retina LCD
• Thunderbolt port
• Thinner? (iPad 2 is thin enough)

Current Prices of the iPad 1 and iPad 2 (16GB Wi-FI only):

• iPad 1 ($400)
• iPad 1 – Refurbished ($350)
  Note: Includes 1 Year Warranty.
• iPad 2 – ($500)

iPad Buying Strategy

If you own an iPad 1, if the new upgrades are must-haves and you have the budget of +$150 after selling your old iPad 2, go for it.

If you do not own an iPad and on a budget, I would suggest you consider purchasing the refurbished unit of the iPad 1 for $350.  That’s a savings of $150.  The only big kicker the iPad 2 features is the front-facing camera.  If this is a must, then get the iPad 2. If you’ve got the money, do what you do best, buy!

If you’re contemplating on waiting to purchase or upgrade to the rumored iPad 3, ask yourself the following question.  Do you really want to wait 7 months for the iPad 3, which is based on the rumor?  You’d probably be better of buying or upgrading to the iPad 2 and selling it before there’s concrete evidence that an iPad 3 will be released this Fall.  Based on the forecasted low supply and demand of the iPad 2, you’ll probably be able to sell it or $450.  A depreciation of $50 on a technology product is awesome at best.  In addition, my gut feeling is that there will not be an iPad 3 that goes on sale this year for the following reasons:

• Apple’s current product release strategy appears to be on the defensive and releasing only a product if they see competition taking market share.  Apple had the iPhone and iPad developed years before release.  They’ve done an excellant job in timing the market and releasing their  products when it was necessary.  Apple did this with the iPhone 2, 3, and 4 and will do the same with the iPad.  Currently, the iPad 2 does not face a big enough danger of losing market share given that its competitors are at best, offers the same features as the iPad 2. The only scenario where I think they would release their iPad 3 or iPad 2HD would be if its main competitor (XOOM), would release a HD resolution template at the price of $500.  However, this is highly unlikely as the XOOM is currently priced as $600+. In another words, Apple is the chipleader and they have no reason to be aggressive with their chips unless they see need or opportunity to push.
• The price on the iPad 2 is very competitive.  I’d be surprised if the profit margins on the iPad 2 16GB was more than $100.  Apple’s strategy is probably getting as many consumers to own the iPad hoping that it would a) self-advertise to the public, b) consumers purchase content from iTunes, and c) bank on volume n sales .  Apple probably makes better profit margins on the higher spec’d iPads, marketed towards the wealthy since they don’t really care about the price.  Given those reasons, adding a Retina LCD and a thunderbolt port will surely, increase the costs of producing an iPad to the point that the 16GB model will have to be priced above $500.
• Apple is more likely to introduce a 7″ iPad 2 tablet than an iPad 3.

What’s My Plan?

I am not an iPad 1 owner and I plan to purchase the iPad 2.