Last month I shared what I believe to be true about the price consumers will be willing to spend on tablets, and with information slowly leaking out that OEMs are determined to price themselves out of contention I can't keep quiet. My original rant was based on information at the time that the Motorola XOOM was going to be priced at an entry point of $799. I explained why I think that is too high, even for a well-equipped device. Now we are hearing that the XOOM will be retailing in Best Buy for $1199, an insane figure.
LG is showing off its upcoming Optimus Pad at the Mobile World Congress in Barcelona, and it looks really nice with an unusual 8.9-inch screen. The insanity with Android tablet pricing continues, however, as word comes that the LG tablet will sell for €999 ($1350) in Europe. This is so far out in left field that it's clear the Android tablet genre may be doomed for failure on a massive scale.
Is the problem that vendors are cramming too many high-cost components (or features) in tablets to try to stand out? If so that is a strategy doomed to failure, as it prices the device out of the range consumers will be willing to pay. Apple set the standard with pricing on the iPad, and no matter how any competing device compares with the iPad it better be priced similarly. That means $499 for an entry level model (Wi-Fi only), and well under $1,000 for a fully equipped version.
Tablets are a different class of product that affect how consumers approach the purchasing process. They do not replace an existing class of product, so no price comparison works. It becomes more of a marketing process to stimulate an impulse purchase, and $500 is the magic price point to make that happen. Android tablet makers may be killing the genre before it even gets started. As analyst Michael Gartenberg is fond of stating, a company can sell 50,000 of anything, a point of view I share. But that sales volume is nothing in the consumer electronic space.