Apple reducing iPad 2 orders, but 'too early to tell' if it will be phased out

Apple has begun reducing orders for the iPad 2 ahead of the unveiling of a new third-generation iPad, but it's not yet known whether Apple will keep the iPad 2 around at a discounted price.

 Sources in Apple's supply chain told DigiTimes that orders for the iPad 2 are gradually dropping ahead of an anticipated third-generation iPad. While iPad 2 orders are being reduced, orders for the next iPad, reportedly set to launch in March of 2012, remain steady.

Various reports have suggested that Apple will continue to sell the iPad 2 at a discounted price after it launches a third-generation iPad. Apple already employs that strategy in offering the iPhone 3GS, first released in 2009, as an entry-level handset, in addition to the iPhone 4, released in 2010, and iPhone 4S, which just launched in October.

DigiTimes, which has a hit-and-miss track record with Apple-related rumors, also believes that the iPad 2 will remain available at a discounted price in order to take on Amazon's $199 Kindle Fire.

With the reduction in iPad 2 orders, sources reportedly told the publication it is "still too early to tell" whether Apple plans to phase out the iPad 2, or keep it around following the launch of a third-generation iPad. "More observations need to be done in 2012 before the picture becomes clearer," the report said.

Apple has found great success in continuing to sell older iPhone models at discounted prices. As of August, the iPhone 3GS was still the No. 2 selling smartphone in America, and Apple is rumored to still be producing 2 million per quarter of the two-year-old handset, which continues to often outsell newer Android handsets.

Numerous rumors have suggested Apple plans to expand its iPad lineup in 2012, offering more models with different features at a number of price points, much like it already does with its MacBooks. The next iPad is expected to feature a high-resolution Retina Display like is already found on the iPhone and iPod touch.

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Mini iPhone rumors and affordability

For a tech company known for selling premium gear at premium prices, Apple has made some peculiar--and welcome--moves lately. If new rumors of a cheaper and smaller iPhone are true, they're yet another indication that Cupertino has embraced a cost-cutting religion of sorts, one likely intended to ward off the Google Android juggernaut and build market share at the expense of short-term profits.

Here are three recent examples of Apple's newfound focus on competitive pricing:

1) iPad debuts at $499. When Apple debuted its touch tablet a year ago, nobody really knew what consumers would be willing to pay for a third mobile device that, feature-wise, fell somewhere between a smartphone and laptop/desktop. The iPad's $500-to-$830 price range now seems quite competitive, particularly considering new Android tablets such as the Motorola Xoom will sell in the $800 range. Of course, it's unclear whether the next-generation iPad will maintain its predecessor's pricing structure, or cost more as new features (e.g. cameras) are added.

2) Apple TV at $99. The set-top box, which cost $229 when it debuted in early 2007, underwent radical price-reduction surgery in September 2010 when Apple released a much-smaller model for $99. The diskless, more affordable Apple TV was clearly a response to market forces, where simpler media streamers like the Roku Player were selling well below the sub-$100 price range. Rather than add features to the original Apple TV and retain its premium pricing, Apple chose to duke it out with Roku for mainstream customers.

3) iPhone 3GS at $49. Sure, older-generation tech always costs less, but January's super-aggressive price cut for the 8GB 3GS--from $99 to $49--was a bold more for Apple, one no doubt designed to boost Cupertino's smartphone market share by making the iPhone accessible to a larger consumer base. And even if the 3GS is put out to pasture soon, Apple is showing it's serious about slowing the encroachment of Android devices, particularly at the low end of the mobile market.

OK, some of you will point out that the Mac's premium pricing doesn't exactly fit my thesis that Apple has found low-price religion. But when you consider that Mac sales in Apple's first quarter rose 23 percent year over year, cost-cutting in the personal computer market can wait.

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