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:

No. 5 HP TouchPad

This is the first fruit of HP's $1.2 billion acquisition of Palm last year. The touch-screen device is the same size as the iPad, and it's expected to arrive sometime this summer. Top features include a front-facing camera for video calls and Qualcomm's ( QCOM) dual-core Snapdragon processor.

If the device does materialize, it will be a near duplicate of the iPad 2 without the Apple software or the 350,000 apps at the Apple App store.

No. 4 RIM PlayBook

At last count, RIM has had five preview-peek sessions featuring the long-anticipated PlayBook tablet.

Each peek is designed to tantalize potential buyers as well as buy time while developers try to get the product ready for sale.

The most recent speculation, stemming from RIM's PlayBook demo at the Mobile World Congress, included another mention that the tablet device will be compatible with some Android applications. This would help RIM avoid being left out of the app development market dominated by Apple and Google.

But to date, RIM has offered no specific time for its PlayBook launch.

No. 3 Samsung Galaxy Tab

Samsung's Galaxy Tab may be exhibit A for Apple's lack of urgency to cut prices. The 7-inch, touch-screen Android device arrived with a big splash in November during a New York debut party, but sales have been harder to track.

The Galaxy Tab sells for $500, or as low as $300 with a two-year data service contract with Sprint ( S). With new tablets running the advanced Android Honeycomb software and the iPad 2 on its way, the Galaxy Tab is desperately in need of a relaunch.

No. 2 Motorola Xoom

As Recon analyst Roger Entner says, the Xoom beats Apple's iPad at the tablet game -- at least until the iPad 2 arrives.

The dual-camera Xoom will run Adobe Flash, and it will be eventually upgradeable to Verizon's super-speedy LTE 4G data service. It also has a dual-core processor, 1 gigabyte of memory and 32 gigabytes of storage. But at $800, it runs up against the prices of powerful laptops and sits well above the basic iPad cost.

Apple's iPad 2 has a strong competitor, but not on price.

No. 1 Apple iPad 2

The No. 1 reason Apple isn't likely to cut the price of the iPad 2: Because it's newer and better.

That doesn't rule out discounts down the road if there's a need to apply some pricing muscle, but for now, Apple can go with a full mark-up.

--Written by Scott Moritz in New York.

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