Apple has reduced the price of the iPad 2, keeping the 16GB Wi-Fi model on sale while announcing the new third-generation iPad at a media event in San Francisco.

The new iPad goes on sale on 16 March and will be priced from £399 to £659, while the now-budget iPad 2 has seen a £70 discount in an attempt to broaden Apple's customer base of the tablet market. Specifically, the price drop means that Apple is now competing against Samsung's 7in Galaxy Tab Plus.

Huawei's MediaPad 10 is tipped to be cheaper than the £399 new iPad, but may well be more expensive than the reduced iPad 2 when it goes on sale in the second quarter of this year.

Apple has used a similar technique with the iPhone range with great success, selling the iPhone 3GS, 4 and 4S all at the same time to cover three different price points,

The Cupertino company will be hoping to take advantage of the mid-range tablet market by pricing the iPad 2 at £329. The 3G version of the iPad 2 is also still available for £429, again getting a £70 price cut. You will no longer be able to purchase the 32GB or 64GB versions of the iPasd 2 from the online Apple store.

For the extra £70 the new iPad - previously thought to be called the iPad 3 or iPad HD - features a high definition Retina display, quad-core graphics, an upgraded A5 X processor.

The iPad 2 will celebrate its first birhtday on Sunday, but it is still regarded as a powerful tablet and should continue to sell well at its new reduced pricepoint.

Read all the details of the new iPad here.