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Apple's new iPad with Retina display is described as a fourth-generation device, one generation behind the iPad Air released last fall. (Lee Jin-man/Associated Press)

Apple has upgraded its cheapest iPad to a fourth-generation model from the iPad 2, which it is retiring. And it is selling iPad with Retina display for the same price.

IPad with Retina display is  the fourth-generation iPad, identical to those released late in 2012, and one generation "behind" the higher-end iPad Air released in 2013. It runs on an A6X chip, rather than the faster A7 of current generation iPads.

The iPad 2, which Apple will no longer sell, was released in 2011.

The iPad with Retina display comes with 16 GB of storage and with Wi-Fi only model will cost $399 — the same price as the second-generation model it replaces. The Wi-Fi and cellular-compatible version is $529.

Compared to the iPad 2, the iPad with Retina display has a sharper screen, faster chip, and a better camera that shoots in full 1080p HD video, rather than the 720p on the iPad 2, "offering a dramatic upgrade in power performance and value compared to the iPad 2 it replaces," said Philip Schiller, Apple's senior vice-president of worldwide marketing, in a statement.

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The iPad 2, which launched in 2011, will no longer be sold by Apple. (Paul White/Associated Press)

Apple's current generation iPad models, the iPad Air and the iPad mini with Retina display, were released last October. At that time, the company did not drop the price of the iPad 2. The iPad air and the iPad mini with Retina display start at $519 and $419 respectively for the 16GB, Wi-Fi only models.