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$299 iPad 2 seen shaking up tablet market, Amazon's Kindle Fire

Though Apple already dominates the tablet market, the company could ward off growing competition and increase its sales even further by selling the iPad 2 for as low as $299, one analysis has projected.

The new take from Taiwanese industry publication DigiTimes offered on Tuesday projects that Apple will keep its current iPad 2 available after it launches a third-generation iPad in the coming months. At most, it projects that the iPad 2 price will drop to $399 for the entry-level model, which would be $100 less than the current cheapest model, and would be a strategy similar to what Apple has employed with its iPhone lineup.

But Apple could be even more aggressive and price the iPad 2 even less, potentially at $349 or even as low as $299, the analysis concluded. A $299 iPad 2 is seen "seriously" affecting Apple's tablet competitors, including the Amazon Kindle Fire, which has created a new low-end tablet market with its $199 price.

In addition to an iPad 2 as inexpensive as $299, Apple could also grow the iPad range upwards, the report said. The same publication reported last month that Apple will launch a new high-end iPad model with an 8-megapixel camera and high-resolution Retina Display, along with a mid-range model equipped with a 5-megapixel camera.

But that report also claimed that Apple would unveil the two new iPad models at the MacWorld | iWorld conference later this month, an event that Apple has not participated in since 2009. The claims of a so-called "iPad 3" unveiling at MacWorld were quickly debunked by more reputable reports.

It was also said last month that Apple has begun reducing orders for the iPad 2, but added that it was "too early to tell" whether the 2011 tablet would continue to be sold at a discounted price. The prospect of a new entry-level model has been seen by analysts as a way for Apple to counter the Kindle Fire, which Amazon is believed to be selling for a loss in order to push digital content to users.