Opinion: Unlocked iPads could spur grey market

Apple's distribution model for the iPad tablet looks, smells and feels a lot like its approach for the original iPhone. And if history is any guide, that means a strong potential for a grey market.

There is precious little information coming from Apple as to what route it will take to market for the  iPad.

The 3G-enabled iPad is expected to take a similar distribution model to the iPhone. It is earmarked to be sold in both carrier stores and franchises as well as Apple stores. The difference, however, is that the iPad is likely to be sold as a carrier unlocked device, according to Steve Jobs' announcement.

That means that unlike the iPhone, where unlocked units were being sold on the grey market through eBay and other channels at a premium price, unlocked iPads will be in plentiful supply overseas.

If local channels can't keep up with demand or if Australian shipping is delayed beyond the April release date in the US, then expect to see a flood of iPad 3G models selling through unofficial channels.

Learning from history

When the iPhone was released on 29 June 2007, it was exclusively sold through Apple's American carrier partner AT&T. Devices were locked to that carrier and there was no other sales channel.

As a result, Apple ended up playing a cat and mouse game with hackers intent on unlocking the original iPhone and thus spawning the development of Jailbreaking so that the iPhone become unencumbered by the various restrictions Apple puts around the platform.

Those unlocked iPhones often arrived in Australia via eBay or a friend's luggage, as early adopters took any means possible to be the first to have an iPhone in hand.

A year later, when the iPhone 3G was released, the channel to market shifted, with 22 countries getting the updated hardware and carrier unlocked versions accepted by Apple in a concession to markets with greater openness than the United States.

Today, in Australia, iPhones can be purchased without a lock and carriers will unlock phones that are on contract at little or no charge. Although Jailbreaking persists today, the availability through all of our carriers has negated the need for a grey market in Australia.

Carrier Challenge

The new iPad will pose a new challenge for carriers. Rather than using the current standard SIM card, Apple has decided to use the smaller Micro SIM - making the iPad one of the first commercially distributed products to use this new standard.

That may be a factor in the delayed roll-out - as local carriers might need to alter their systems to deal with this new standard. If they can't get their systems ready to deal with Micro SIMs then there will be some delay to the Australian release. 

Apple's local spokesperson indicated that local sales and distribution arrangements would be revealed closer to the late March release date.

Australian Pricing

Official Australian pricing is yet to be announced.

In an unusual move by Apple, there will be six versions of the iPad. In most other categories they only offer two or three model variants.

All iPads will sport the same 9.7-inch display and offer WiFi and Bluetooth connectivity but the iPad will come in 16GB, 32GB and 64GB models, each with an option for 3G. The cheapest unit, with 16GB of storage and no 3G will retail for US$499. At the other end of the scale, the 64GB version with 3G will set you back US$829.

Given Apple's current pricing model, we're expecting the entry level unit to sell in Australia for about AUD$650 and the highest-end unit to be close to AUD$999. That will create some interesting issues for Apple as the iPad pricing potentially overlaps with the iPod touch and iPhone and starts to encroach on the entry-level MacBook.

Apple was unable to confirm an actual release date for Australia other than to confirm the global release date in late March. Those desperate to put an iPad on pre-order can register their interest here.