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TheStreet Open House

5 Reasons Apple Won't Cut iPad2 Price

NEW YORK ( TheStreet) -- As tech turns its tablet-crazed attention to Apple's (AAPL) unveiling of the iPad 2 Wednesday, don't expect a hefty price cut to steal the show.

It's a safe bet that Apple's iPad themed presentation in San Francisco Wednesday will showcase the newest version of its popular tablet. And if the rumors are true, it will have tapered edges and two cameras, one rear and the other front-facing for FaceTime video chats.

Speculation also holds that Apple could introduce iOS 5, a new version of its mobile operating system along with a possible rollout of a so-called cloud-based file storage system.

As some have noted, there's one element at Apple's disposal that could completely dampen the spring crop of rival tablets from Motorola (MOT), Research In Motion (RIMM), Samsung and HP (HPC) -- a steep price cut.

Apple iPads start at $500 and run as high as $830. Competing devices range from the Samsung Galaxy Tab ($500) to the new Motorola Xoom ($800).

Why cut the price?

"They have a better device at a lower cost and they are happy with their margins," says Recon Analytics' Roger Entner. "Apple is selling iPads faster than they can make them; why would you want to create more demand you can't satisfy by lowering the price," Entner says.

In the third quarter, research shop ABI estimated that Apple's iPad accounted for 93% of the tablet market.

And now that new Google (GOOG) Android devices such as the Motorola Xoom, which is running on the Honeycomb tablet software start to arrive, Apple is poised to take the competition up another notch.

"Honeycomb is very good, and the Xoom is better than the iPad today. But I think Apple will leap ahead again with the iPad 2," says Recon analyst Entner.

Here are five reasons Apple won't pull the trigger on a tablet price war:

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