Apple unveiled the new iPad yesterday and decided to keep selling the iPad 2, albeit after dropping the $499 price by $100, making it competitive with the $199 Kindle Fire from Amazon.

Will that last long? Will Amazon respond by slashing the price on the Kindle Fire?

Amazon could not be immediately reached for comment, but there's speculation on what the Seattle-based tech company will do.

The iPad 2 price drop will put pressure on those who are trying to undercut the iPad on price, said Chris Jones, an analyst with research firm Canalys, according to Bloomberg. The market has changed in the past few months with the arrival of Amazon.

The Mac Observer noted that the iPad 2 is superior than the Fire on battery life, display, processing power and graphics performance and number of apps - and that the divide between the tablets may persuade those thinking about the Fire to buy the iPad2.

Apple's 20 percent price drop could mean a lot for some price-conscious consumers, the site said.

The price cut could prove an important move for Apple as it bids to see off the challenge from cut-price rivals such as the Amazon Kindle Fire, said

Apple CEO Tim Cook unveiled the successor to the iPad 2, dubbed the new iPad, at the Yerba Buena Center for the Arts in San Francisco.

Among the highly-touted features of the new iPad are its dazzling retina display and 4G LTE coverage, which allows for faster download times over carrier networks.

The 16 GB version of the new iPad will set you back $499, the 32GB one will be available for $599 and those who want the 64 GB will have to pony up $699.

For the added convenience of 4G LTE coverage, those prices shoot up to $629, $729 and $829, respectively.