AAPL Apple Inc

By Tripp Mickle 

Apple Inc. on Tuesday unveiled a lower-priced iPad starting at $329, in a move to breathe new life into a once-hot product that has struggled with declining sales.

The new iPad, which Apple says has a brighter screen, amounts to a $70 price cut from a comparable 32-gigabyte model, the $399 iPad Air 2, first introduced in 2014. With Tuesday's announcement, Apple is no longer selling an iPad with the "Air" moniker.

Apple also said it would release its first iPhone with a red aluminum finish, the product of a 10-year partnership between Apple and (RED), the global AIDS nonprofit group. The company said it also is expanding storage in its smaller-size iPad Mini 4 and iPhone SE, though the devices' prices won't change.

The iPad announcement is the latest effort by the company to diversify prices as it faces increasing competition in the tablet and smartphone market. Apple last year introduced the iPhone SE at a starting price of $399, about $250 cheaper than the lowest-priced iPhone 7. The company Tuesday also said it is doubling the starting capacity of its iPhone SE to 32 gigabytes.

The iPad has struggled over the past five years against competition from products such as Microsoft Corp.'s Surface, a tablet with laptop functionality, and bigger iPhones, which Apple debuted in 2014, said Patrick Moorhead, president of technology-research firm Moor Insights & Strategy. Also, many people hold on to iPads longer, he said, finding that their ability to stream videos or surf the web doesn't become outdated as quickly as smartphones.

Over the years, Apple has made the iPad smaller, slimmer and more powerful, but the changes have failed to arrest 12-straight quarters of declines in shipments from a year earlier. Annual sales of the device have fallen 36% from their 2013 fiscal-year peak to $20.63 billion, reducing the device's contribution to revenue to 10% from 19% over the period.

Apple has tried to overcome consumer reluctance to upgrade iPads by increasing the device's functionality and broadening its appeal. The company in 2015 introduced the iPad Pro, a more powerful device designed to appeal to corporations.

Apple Chief Executive Tim Cook told shareholders last month the iPad will eventually supplant laptops as the go-to device for many consumers. But the iPad Pro line -- it starts at $599 plus $149 for a keyboard and $99 for a pencil -- carries a higher price tag than some laptops.

The entry-level iPad announced Tuesday, which carries the same weight and thickness as the original iPad Air, gives consumers a more affordable option to stream video or read books. Still, it is priced higher than competitors' products such as Samsung Electronics Co.'s Galaxy Tab E, which costs $229 on Best Buy.

Apple last month launched its biggest iPad advertising campaign in three years, aiming the iPad Pro at college students and adults in spots during the NCAA college-basketball tournament, National Basketball Association games, and the television shows "The Walking Dead" and "This Is Us." The company spent about $28.3 million on the ads, which generated nearly a billion impressions, according to ad-tracker iSpot.tv.

Speaking to investors last month, Mr. Cook said, "You can expect to see us do more and more where people will generally view it as a laptop replacement. Some people already do."

The new products will be available beginning March 24. In addition to the iPad and red iPhone, Apple announced a new app called Clips that lets users combine video, photos and music to share with friends. It also said its student-coding app, Swift Playgrounds, is available in more languages, including simplified Chinese.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

March 21, 2017 11:07 ET (15:07 GMT)

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