If you can’t beat ‘em, undercut ‘em.
It’s the new slogan of tablet and smartphone manufacturers trying to push products into an already packed space.
Companies are attempting to compete in today’s crowded tablet market by slashing product prices to undercut rivals. The iPad, the front-runner in the field, set the entry-level price for tablets at $500. It’s the price to beat.
And many companies are trying hard to beat Apple. Toshiba’s recently debuted Thrive tablet starts at $430, while Acer’s Iconia Tab A500 costs $450. As recently as last week, HP announced steep discounts on its TouchPad tablet, which was originally priced at $500. TV manufacturer Vizio announced a new tablet today priced at $300, one of the cheapest Android tablet options to hit the market.
It’s the latest attempt by Android tablet manufacturers to combat the problem that essentially all of them face: differentiation. With some exceptions, many of today’s Android tablets offer microSD card slots, HDMI output, 3G connectivity and other common attributes. Essentially, they all do the same thing. And beyond customizing the user interface to make the tablet’s operating system look different than others, there’s not much the manufacturers can do.
“As the devices become more and more alike, manufacturers will do anything they can to differentiate themselves,” Gartner analyst Ken Dulaney told Wired.com in June.
Ports, UI tweaks and connectivity options aren’t enough. Now they want to lure you in with a bargain-bin price tag.
It’s a similar story for smartphones. Samsung recently debuted the Conquer 4G, one of the first low-end Android phones to run on Sprint’s WiMax network. ZDNet reporter Mary Jo Foley reported that Microsoft may be working on its own low-end Windows Phone operating system, codenamed “Tango.” And of course, we’ve had feature phones available to consumers for a long time, made specifically for those who don’t want to shell out wads of cash on the latest and greatest mobile device.
Despite the growing adoption of smartphones, most of the global population still thinks cheaper is better — for phones, at least. Nielsen research claims over 55 percent of U.S. mobile phone owners have low-end phones.
Tango isn’t much more than a rumor circulating in tech circles at this point. Yet in the wake of Nokia announcing it would move away from pushing its low-end Symbian operating system on North American low-end phones (as reported earlier today by AllThingsD), the Tango rumors begin to make a certain amount of sense. Especially considering Nokia’s big bet on Windows-based phones this year.
But there’s a difference the smartphone and tablet markets that manufacturers aren’t yet taking into account. Phones are an integral part of how our society functions today. We use cellular devices on a daily basis, relying on them more and more as they’ve grown “smarter.”
Tablets are a different story.
“The tablet market, though growing, is not mass-market yet,” Gartner analyst Phillip Redman said. “Buyers today are still early adopters and are less concerned about cost versus functionality.”
Few manufacturers outside of Apple are broadcasting tablet sales widely, which suggests sales of non-Apple tablets aren’t as high as manufacturers would like. And yet, as Redman said, it’s an emerging market, one that is still forming with each new tablet release. It’s far too early to tell whether or not the low price strategy will pan out.
But one thing is certain: Even with all the discount tablet options currently available, many people are willing to pony up $500 for Apple’s tablet. In the company’s last earnings report, Apple announced it sold close to 10 million iPads over the past three months alone. Compare that to the 440,000 Xoom tablets Motorola shipped — not sold, but shipped to retailers — last quarter, and the picture becomes pretty clear.
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