A price cut is overdue, Shope said, though not necessarily a cut to the current low-end model, although that is possible. Instead, Apple could offer a lower-end model. He said,
"... an outright price cut at the low end and the possible introduction of a low-capacity iPad 2 line once the iPad 3 is released could stimulate demand considerably without any substantial margin compression. In fact, a sub- $400 iPad 2 with 8Gb of capacity could further limit the competitive prospects of Android tablet vendors in 2012 and attract more cost-sensitive consumers amid the currently depressed macroeconomic environment."
That said, Shope has not changed his estimates for quarter's iPad 2 sales, and he is also expecting record iPhone sales of 30.3 million devices, a 77 percent increase jump over Apple's fiscal Q4, calendar year Q3 2011 results.
There have been rumors since the first iPad was introduced that Apple might launch a smaller, 7-inch model, but Steve Jobs' famous rant that tablets with sub-10-inch screens were "DOA" seemed to put an end to that. With Tim Cook now in charge, the 7-inch model might see the light of day.
That could be, as Apple's "normal" annual refresh cycle would mean a March 2012 refresh of the iPad with an iPad 3, but some recent rumors have pointed to a 7-inch tablet that will be very similar to the current iPad 2, but with a lower price point (around $300), with perhaps a lower storage tier.
If Apple did that, the company would then launch of a full-sized "iPad 3" with a Retina Display later in 2012.