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The Other Tablets

{complink 379|Apple Inc.} should enjoy its domination of the tablet PC market while it lasts. A flood of tablets from all kinds of manufacturers will hit the market during the 2011 holiday sales season, and many of them will be priced at a hefty discount to the iPad.

The pressure that has been building on Apple, which has resorted to defending its tablet turf in German and Australian courts, is bound to intensify in the coming months. (See: This Apple Win Should Not Stand)

Some people say pricing will not be an effective competitive weapon against the iPad. But the recent case of the TouchPad from {complink 2376|Hewlett-Packard Co.} — it sold out completely within days after a severe price cut — indicates many buyers would gladly snap up a much cheaper device than pay $500 for the clearly market-leading product from Apple. (See: Apple Can Be Beaten.)

In addition to the usual PC and smartphone vendors (Asus, Dell, HTC, Lenovo, Motorola Mobility, Research in Motion, Samsung, and Toshiba), I have seen tablets from companies not traditionally associated with the computer market on electronics retailer shelves over the last several weeks. Companies that have entered or signaled they will enter the market include Huawei, LG, Nokia, Sony-Ericsson, and ZTE. The list is stretching out.

For instance, {complink 12493|Vizio Inc.} has a pretty attractive tablet stocked alongside its flat-screen television offerings at BJs in the United States. The simply dubbed “Vizio 8-inch tablet” is being marketed by the company as an entertainment device that will “keep entertainment freedom at your fingertips.”

The Vizio tablet offers exactly what most other tablets do — access to the Web, TV shows, movies, music, and apps — and is optimized to serve as a universal remote control for the ultimate couch-potato experience. It runs the Google Android operating system and retails for approximately $329, versus the $499 for the lower-end Apple iPad. Sure, it's not an iPad, as, no doubt, Apple enthusiasts will tell you. But by December, the Vizio tablet may be retailing below $300, making it an appealing purchase for parents, spouses, and even corporate entities. I might buy a product like that for my high schoolers.

Then there is the much touted Amazon tablet, which is forecast to make its debut this quarter at a similarly low price point. With the Amazon name behind it, there's the promise of a tighter link with other offerings by that company, which is reportedly willing to take a loss on the device and make up the difference in other sales: books, music, video, etc. (See: Kindle vs. iPad: ‘Nasty’ Tablet War Ahead?)

Consumers have a lot of tantalizing options to the iPad. And with the kind of offerings I expect to hit the market, consumers may not care they can't afford the iPad.

My concern is not so much for consumers — they're in good hands — but for the OEMs making the tablets and the component suppliers supporting them. A price war hurts everyone. The kind of margins now expected on the tablet could end up shaking up the market, but not before some suppliers and OEMs suffer considerable losses.

There's another solution I believe companies will start exploring soon. This is the bundled strategy that has been well tested by smartphone manufacturers and telecommunication service providers, which heavily discount products or give them away, as long as consumers were willing to sign multiyear subscription agreements. If the industry follows this pattern, not only will we see even cheaper tablets, but many of them likely will be offered free to telecom subscribers.

If the industry goes in this direction, some manufacturers will be forced to exit the tablet market, because the power to determine viable players will shift from the OEMs themselves to telecom service partners. Some, of course, will still exist in the margin, but the stronger players would have to ally themselves with service providers. Apple has done reasonably well with this strategy in the smartphone segment, but will telcoms be as willing to suck up the cost of discounted tablets?

20 comments on “The Other Tablets

  1. Houngbo_Hospice
    September 6, 2011

    I'm looking forward to seeing what Amazon's tablet will look like. The price tag may be the determining factor, but the device should also be “closer” in functionality to the iPad for people (who have already used an iPad) to make the switch . And I am one of those persons. 

  2. Anand
    September 7, 2011

    I feel dream run for Apple is over. Offlate We have been hearing lot of bad news about Apple. With Steve Jobs out of Apple many people feel it would be tough for Apple to maintain the same momentum it had earlier. With recession fear looming large I think people would be happy to buy 100-200$ low cost tablet rather than invest 500$ in iPad.

  3. saranyatil
    September 7, 2011

    Anandvy,

    I am trying to see the other side of the coin, Cook would have strategised on similar lines like steve so we cant come into conclusions on what will happen to Apple.

    I do agree on the cost many companies can sell huge volumes if they can quote a smart deal.

     

  4. saranyatil
    September 7, 2011

    “closer” in functionality to the iPad for people (who have already used an iPad) to make the switch .

    This calls for a big game as you rightly said for instance it is very difficult for myself to switch to an alternate product other than Apple.

    I feel the device create a bond with us.

  5. Adeniji Kayode
    September 7, 2011

    I agree with you Hospice, Other manufacturers ofcourse should not go any less to what is already in market for less price so that they can come up the ladder and also win over those with Ipads already

  6. Adeniji Kayode
    September 7, 2011

    You are right anandvy,less price for more features or something close to whatever is already in the market always improve sales

  7. Jay_Bond
    September 7, 2011

    HP stated they were going to produce more Touchpads because the overwhelming demand for them was surprising. Really? When you take a tablet and drop the price from $400-$500 to $99 and $149 and you sell out in hours, what's surprising about that. Nobody said the product was bad; they just didn't want to pay almost the same price as an Ipad. When other manufacturers start lowering their prices they will see an upswing in sales also. Apple is going to have a tough time competing with similar products priced well below the Ipad.

    I don't think Telecom companies are going to go full swing into tablets and contracts. When so many people only use the Wi-Fi features, and you can get free Wi-Fi practically everywhere, many people won't commit to a 2 year contract for data service. Since both AT&T and Verizon have already been selling the Ipad and the Samsung Galaxy, I don't see them jumping at the chance to sell many other companies products at a loss.

     

  8. AnalyzeThis
    September 7, 2011

    @Hospice_Houngbo, I'm also looking forward to the Amazon tablet. And $249 seems to be the consensus likely price point for the base model, which would make it incredibly competitive indeed.

    As others have mentioned elsewhere, Amazon is the best prepared to launch a tablet: they already have all the necessary services in place (music/apps/books/video distribution, cloud storage, etc.), the hardware is really the last piece of the puzzle.

    A $249 Amazon tablet would essentially doom all these tablets that hover around the iPad's ballpark retail price, with the PlayBook being hit hardest due to the likely similar form factor to Amazon's tablet. Wouldn't be surprised to see RIM give up on tablets entirely before the end of the year and I believe they'll rid themselves completely of it by end of Q2 2012 at the latest.

  9. Parser
    September 7, 2011

    For Apple to keep compete with other tablets it has to lower the profit margin. No company wants to hear this but in this case it is true. The exect amount of cuts will depend on strongest competitor tablet price. And it is not any competitor as well any tablet. Mostlikely it will be here reviewed Amazon's entry and possiby Google's if they decide to expand their cell phone business. 

    Apple can only cut its onw profits not the suppiers' prices. The last one has beend already minimized for last few years. 

  10. elctrnx_lyf
    September 7, 2011

    certainly the price war has begun and i would like to see more and more tablets in the market to choose from. The contracting through telecom is a really gud option because the monthly payment instead of single time payment.

  11. Piplzchoice
    September 9, 2011

    Nobody said the product was bad; they just didn't want to pay almost the same price as an Ipad.”

    Indeed customer satisfaction with HP TouchPad is much higher than with most other tablets. Here is the results of this month online marketing research update for leading tablets.


  12. _hm
    September 11, 2011

    Apple has ideas, technology and are prepared for price war too. Many vendor tried same for iPods. However, technical features and price are so attractive for this device, it is difficult to compete with Apple. Is it also news that Apple is introducing $100 iPhone like device for lower end of cell phone makret?

     

  13. Clairvoyant
    September 12, 2011

    Very interesting link, Piplzchoice. Overall, in most categories, each product is rated fairly close to each other.

  14. Piplzchoice
    September 12, 2011

    There are two major exeptions:

    1. Customers of Samsung Galaxy 10.1 are disappointed with their Reliability (0.91) and Reliability is the second most important attribute of customer experience as 11.32% of all “conversations are about it.

    2. WebOS popularity with the customers is also quite surprising.

    These metrics are generated by using Opinion Mining techniques.

  15. Joseph Fazio
    September 12, 2011

    a copy of my email of our discusion:

     

    Sorry sir but I shall never NEVER buy a tablet that is not made by apple. Not amazon, not hp, not google, not android, Samsung, nothing.

     

    Not one of those companies has ever thought of the future. Nor advancing technology as apple always has. Every company dog does nothing but play catch up. The only thing innovative I seen from something other than apple was some company made either a laptop or tablet that was dual screened touch. Now that sir is thinking out of the box. Now I ain’t rich and don’t own all apple stuff, hell just got an iphone the other day finally. But I am computer literate….probably more than you are in how each OS and hardware differs from each other. And apple has the superior OS, chipsets and style that can’t be beaten.

     Anyone who argues this is unfortunately a poor idiot and should sit on the porch with the other dogs. If folks can’t afford an apple go buy windows but don’t complain when it fails, or some other problem makes you miserable and hate your computer you should have been patient and saved up like I have. Took 5 years to find the right moment to make this iphone purchase in this terrible economy. And already with the work load I have gained from it it has just paid for itself.

     With these companies I see nothing but greed. No innovation, no advancement, no reaching for something better. And everytime you give those dogs a shred of time you cheapen your credibility with us. Bill Gates pushed and shoved his way with stolen property. Steve did what an American would do..create his own. And now as before Apple is once again on top. This time everybody knows it. Not to say apple doesn't have their share of problems. not in the hardware or software, but in company. all can agree they are a bit selfish. the iphone jailbrakes to change simple sounds is rather a keen argument. but it's a drop in the bucket for what truly is a revolutionary piece of equipment. and the ipad is just a bigger version of that.

  16. Clairvoyant
    September 13, 2011

    Hi Joseph, did this email come to you? What was it in response to?

  17. Joseph Fazio
    September 13, 2011

    no just when i saw the post i tried to sign up but for some reason the web site wouldn't let me. so in order to be heared i tried to send an e-mail to him. but his email was having the same trouble. so i sent it via customer service and the forwared it and he asked to re sign up and comment. and here we are.

    but i am still right. any coverage any news source gives these wanna be's looking to make cheap money for a truly inferior product reduces your credibility in my eyes to give me an honest opinion. everyone knows samsung ripped off apple it's blatantly obvious. HP had a “we suck just take it away” strategy just to get it into peoples hands at a wopping 99 bucks which says to me how much it Really costs to make these Mini Notebooks. which between manufaturing marketing, delivery, and salesman commission. it ain't really alot. and i really feel ripped off looking at a 4 or 500 buck retail cost. and the sad truth is that HP is going to nickle and dime everybody to make that money back. oh yeah i almost forgot Tablet ANTI-VIRUS. a nightmare wes craven couldn't come up with. and the others……..whoever they are just don't have it. sheep following sheep. not one news source will say that these products flat out suck and are unimaginitive. that's biased and unfaithful to the law and integrity of journalisim

  18. JADEN
    September 14, 2011

    Actually, most of these cheap Android tablets already available in the market could not access Android Market, Google does not give access to that, they have limited features, they can't give exactly what the costly one can give.  I think that makes the difference.

  19. Kunmi
    September 24, 2011

    I got a good one (Android) still new and I feel like disposing it. Many of us comment in the past on if Android can replace PC. Now I can emphatically say “NO” because they are just like night and day. Now that the cheaper ones are now in the market, that will worsen the situation. Because the expection of the consumer is to enjoy all the features can give but behold consumers can only get equivalent of their money that was invested.

  20. Anna Young
    September 26, 2011

    @ Adeniji Kayode, “less price for more features”? Yes please! Some OEM and suppliers will suffer considerable this holiday season. The likes of Apple still seams to surge ahead in the price war race. This will probably change when more tablets are introduced into the market at a reduced price, promising good functionality.

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