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NPD: Expanded distribution of iPad 2 could be Apple's key to success

Exploring alternative retail partners like Kohl's or Bed Bath & Beyond for the next-generation iPad could give Apple another advantage over its competitors in the booming tablet market.

Stephen Baker, vice president of industry analysis with the NPD Group, wrote about the anticipated launch of the second-generation iPad on his company's official blog on Tuesday. He said he believes distribution and availability of the touchscreen tablet will be an even more important factor than technical specifications for the next-generation device.

"As Apple talks more about small businesses and the iPad opportunity in enterprise it would be great if distribution focus was expanded to include more business-oriented channels like the office stores and the DMRs, such as PC Connection and Insight," he wrote. "Those chains and resellers offer Apple real chances to gain incremental volume versus shoveling a couple more units through carrier stores or adding another Web site.

"Although, even in its consumer focus, Apple's distribution clearly needs to expand into more regional CE outlets and test more alternative distribution opportunities like department and home stores, such as Kohl's or Bed Bath and Beyond."

Though the first-generation iPad was initially only available through Apple, the company gradually expanded its availability as 2010 went on. By the end of last year, the iPad was on sale from a number of partners, including carriers Verizon and AT&T; retailers like Target, Best Buy and Walmart; as well as third-party distributors.

In addition to distribution, Baker said he believes pricing of the next iPad will be a "critical" decision for Apple. This year, a plethora of tablet competitors running a variety of operating systems are set to hit the market and aim to unseat the iPad as the best-selling tablet device.

With tablet competition looming, Baker sees device makers competing for shelf space and an inevitable price war. If the iPad 2 launches with too high a price, Apple could potentially be undercut by a less expensive competitor at some point before the holiday buying season of 2011.

"Since Apple never responds to that type of price activity," he wrote, "the key to iPad 2's announcement will be whether today's price holds or Apple is the first one to shoot off a canon in a tablet price war."

For the moment, the pricing of Apple's iPad remains an advantage over its competition, with the 16GB Wi-Fi-only model starting at $499. Apple executives have said they see the tablet market as an important sector with huge growth potential, and they plan to be aggressive in terms of pricing.