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My guess is that it's related to supply constraints. They sold 14 million of them last year. That's a lot of chips.

Is their RAM special in some way that might make it a supply constraint big enough to warrant limiting the memory in the iPad so much?

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I think they did everything to get the price down to $499 - including removing camera and reducing RAM. I'm guessing they thought that the $499 price point was required to make iPad a hit.

$499 is a very symbolic price.

I doubt supply constraints are an issue. They're the single largest purchaser of flash memory in the world[1]. I imagine manufacturers would be bending over backwards for them, since their orders must all be quite large.

[1]:http://edition.cnn.com/2010/TECH/gaming.gadgets/10/21/macboo...

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