March 17, 2011

Pricing Strategy is Key for non-iPad Tablets Survival

Prior to writing this entry, several headlines popped into my head, some of other runner-ups are:

How other Tablets can compete in the iPad 2 World?
Non-iPad Tablet Survival Guide
Why Motorola and Samsung Doesn't Get Apple

The purpose of this entry is not meant to take jabs at other tablet makers, it's more of a realization as I was looking in the market for iPad alternatives or the lack of.  Apple is known to produce "premium" gadgetry and their loyal fan base understand that there is a hefty Apple design and premium "tax" involved when paying for Apple goods (iPad, iPhone, MacBook, etc...), and they are willing to pay for the price at Apple's asking price because its the "in" thing.  While I appreciate Samsung (Galaxy Tab MSRP: $749) and Motorola (Xoom MSRP $799) attempting to create for their version of high performance and top quality gadget specs., their pricing strategy is simply too expensive; if a consumer has the financial means to afford goods in this premium category, my guess is that they'd rather buy the iPad2 instead.  This is not to say that the Galaxy Tab or Xoom is not as good as the iPad2, but I venture that if they are already paying for the premium price, they might as well go after the one everyone lusts after.

Without knowing the cost and margin of these Android-based tablets, its easy for me to say if they lower their prices by atleast $100 below the lowest costing iPad 2 ($499), one would expect a stream of cost-conscious consumers trickling in.  From a conversation I've had with a co-worker who is willing to buy a couple of tablets for his kids for entertainment/education/road trips, he simply cannot justify the Apple premium since his kids are still in grade school and probably will not take care of a $500 tablet as they should.  If  there are respectable Android-based tablets at $300 range, my co-worker would be willing to buy them...  as it stands, he's only option is to hack a $250 Nook into a full on Android Tablet which is kind of ridiculous.  I think there is a tremendous opportunity for competition to create $200 to $400 tablets (much like the "netbook" craze).

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