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I wouldn't be so sure about that 99% on the retina display. While there were existing (relatively) cheap, production 3-4" screens approaching the 300+ PPI resolution of the iPhone 4 when it was announced, there is nothing like that in the sizes (or quantities) needed to produce a 300+ PPI screen for the iPad.

Remember, Apple is a design company. The "sauce" is in how they combine existing (production or future) parts designs into a single device and then load it with software that makes it work for consumers. Apple is like a chef, taking various types of ingredients and combining them into a dish that makes people fawn.

I was about to post the exact same. A retina display on the iPad 2 would be 2048pi×1536pi, which is nearly double my MBP13" resolution on a 9" screen (and almost the same as the 27" cinema display resolution).

Retina display certainly won't happen. As rbranson mentioned, no one produces screens anywhere close to what the iPad 2 would require for the "Retina" tag.

Yeah and considering the iPad gpu already has fillrate issues at 1024x768, quadrupling the number of pixels seems unreasonable.
I wouldn't be surprised if the iPad got a slight bump to 1280x960 just to fill out the "720p HD" spec though.
That would create big headaches with existing apps though, which is worth it for major improvements in resolution (e.g. the Retina display) but probably not for more minor improvements in resolution.

Also, the scaling would be awkward, because it isn't a multiple.

Breaking or blackboxing every single application in the process?

I don't think so, that's not how Jobs leads Apple. If you didn't see the iPhone's resolution change until the doubling in the iPhone 4, you won't see any different on the iPad.

Jobs has broken every single app several times before, I wouldn't put it past him (not that I think a retina like display is coming to the iPad).
Breaking as in "they don't fucking launch" sure, but breaking as in "those things look like shit now"? Not a chance.
Thinking of the GPU - what choices does Apple have if they are considering a GPU upgrade? Not sure how much better SGX540 is in dealing with greater number of pixels and if Series 6 is not that much far in the future to get in on an iPad2.

Tegra2 is technically a better solution but with all the A4 hype it would be tough for Apple to switch to Nvidia.

Given all this, the iPad2 is more likely to be an modest upgrade with cameras and SGX540 at the best. Or a little more wilder guess would be Cortex-A9 based A-5 and SGX540.

Well, they might increase the screen resolution but stop short of doubling it. Something like 1400x1050 or 1600x1200 should be a nice improvement…
And would break[0] or blackbox every single application in the process…

Yes, right.

[0] considering how scaled applications looked after a "trivial" doubling from iPhone to iPhone 4 resolutions, a half-assed scaling (1.367 or 1.5625 for your suggestions) would not only look utterly terrible, it would burn significant amounts of resources. Which are already limited on the iPad (it has filltrate issues for instance)

Retina Display doesn't automatically mean 300+ ppi. If you believe Apple, it simply means 'at the distance you hold this from your eyes, you won't perceive individual pixels'. I have an iPad and I hold it on my lap or a table which is usually 2-3x farther away from my eyes. I didn't do the math, but making a larger screen with that pixel density is closer to the realm of possibility than a 300+ ppi screen and it would still be called a Retina Display by Apple.
Which doesn't change the fact that, barring moving the iPad to 7", "retina-ing" the iPad's screen means doubling its resolution (as was done for the iPhone 4).

This translates into a 2048x1536 resolution in about 10", and around 260dpi.

2038x1536.

On — at best — a 1GHz dual-code ARM CPU with something like an SGX 540 (or a 545) GPU, maybe a miraculous XT-series (multicore GPUs, perfs scale almost linearly).

Desktop GPUs have a hard time driving that kind of resolutions on modern games, and they don't have to deal with power issues much...

Indeed. It's one thing to have a mobile phone with a tiny screen but with high pixel density. The iPhone 4 doesn't even have XGA resolution. It's another thing to have a large screen with high pixel density, you end up with a crap-ton more pixels. Which is a lot more expensive. 2038x1536 is considered extremely high resolution today, and generally only attainable if you have a giant 27" or 30" monitor hooked up with dual-link DVI.

In total we're talking about 5 iPhone 4 displays tiled, which gives you some idea of the potential cost.

It'd be awesome if Apple was able to do this, but it seems quite unlikely. It's far more likely that the iPad will see an incremental bump in resolution.

I do wonder if Apple will treat the iPad like the iPhone and keep the lowest version of the current iPad in production at a reduced price, or if they will have an across the board price reduction like the early days of the iPod.
I have been thinking of getting an Ipad for development purposes. Wondering if I should wait now till IPad 2 comes out.
Depends. Could you get an app out and selling before the second model comes out? It's possible you could very easily recoup the cost of the current one and then some between now and that release date.
If you do, you are likely to be waiting until June or July.
If you need one right away, then obviously get it. If not, I imagine they'll release sometime in April. I don't have an iPad yet, so I'm personally waiting for the second gen.
If you really are getting it for development purposes, you might want to get an older iPad regardless, since it will let you test your app's performance on the device that most of your market will be using.
Yea i dont have an immediate need. I think ill wait a little longer to see what happens
Front-facing camera makes a lot of sense for the iPad. I don't think there is going to be a back-facing one though, it would be pretty unusable with the iPad's dimensions.
Indeed.

It would be very nice e.g. for Skyping on e.g. the couch to have a [web] cam in the device.. or when on the road/travelling. :)

Perhaps the feature I missed most when the device was released.