Motorola: to compete against iPad 2, you need a cheaper XOOM

Motorola: to compete against iPad 2, you need a cheaper XOOM

Summary: It's the same great Android Honeycomb taste, but less expensive. In order to repel Apple's iPad 2 onslaught, Motorola's XOOM needs to come down in price.

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It's the same great Android Honeycomb taste, but less expensive. In order to repel Apple's iPad 2 onslaught, Motorola's XOOM needs to come down in price.

This week's launch of Apple's iPad 2 was a real eye-opener for a lot of us. Nobody expected the company to be able to deliver a thinner, significantly faster tablet at a base price of $499 for the 16GB Wi-Fi model. Right now, Apple's competitors are eating the iPad 2's dust, and the device hasn't even gone onsale yet.

Some manufacturers, like Samsung, are just plain dumbfounded and are finding themselves having to re-evaluate their tablet strategies altogether and reconsidering their product launches.

Currently, iPad's only "True" competitor that is shipping in volume is Motorola Mobility's XOOM, a 10.1" Android 3.0 "Honeycomb" device. Featuring an AU Optronics 1280x800 high-resolution display with a capacitive touchscreen, 32GB of Flash memory storage, 1GB of RAM, an nVidia Tegra 2 dual-core SoC and dual HD cameras, the XOOM is more than a match for Apple's iPad 2, strictly according to spec.

There's two big problems with the device, however. The Google Android 3.0 OS on the XOOM doesn't benefit from a similarly large developer ecosystem as the iPad, and is severely lacking the optimized applications for its high-res display at launch that otherwise makes Android a very popular player in the smartphone space.

Android has about 100,000 applications written for smaller and lower-resolution 800x480 displays such as those used on Motorola's Droid 2 and Droid X smartphones and just over a dozen games and applications on the Android Market that can take advantage of bigger and higher-res screens.

The iPad, by comparison, has over 65,000 iPad-specific applications on the iOS App Store, and can also run over 250,000 programs written for the iPhone and iPod Touch.

Additionally, the current XOOM being sold is tied to wireless carriers, so it costs either $799 without a wireless 3G contract, or $600.00 with 2-year commitment.

Suddenly, the XOOM isn't sounding so great from the perspective of a typical consumer who really only thinks in terms of dollar signs and doesn't rely on spec sheets with speeds and feeds to make average purchase decisions.

The calculus is really a no-brainer. Either spend $499 for a 16GB iPad 2 with over 65,000 tablet-optimized optimized applications with no carrier sign-up required -- or commit to 2-year contract with Verizon in order to get the subsidized $600 price, on a completely unproven tablet platform.

Obviously, there are iPad models which are more expensive, such as those which use 32GB or 64GB of storage, as well as those which can be used on AT&T's and Verizon's 3G networks. However, only one of Apple's iPad 2 models costs more than $799 -- the 64GB 3G version for $829.00. Apple's comparable contract-free 3G version with 32GB of flash storage costs $729.00, still cheaper than the XOOM.

Apple is able to keep prices low as well as provide multiple SKUs for the iPad low due to the fact that the company is able to commit to Q 10 Million+ component orders and is able to leverage a superior-managed supply chain.

While Motorola Mobility procures a large quantity of components from suppliers in Asia, it doesn't have Apple's supply chain flexibility in order to provide different SKUs, and it also doesn't approach anywhere near the volume of component purchases that Apple does in order to completely own all of its parts inventory, so its discounts are substantially smaller.

This can be easily understood by having a look at the estimated Bill of Materials for the XOOM tablet, which is thought to be around $359.00.

So what's Motorola and its fellow competitors looking to produce similar Android 3 tablets to do? Well, there's some good news -- there will be a Wi-Fi only version of the XOOM available in April, and it is expected to to retail from anywhere between $539 and $600.

Still, even at the lower $539 estimate, the XOOM is $40 more expensive than the cheapest iPad 2. While some consumers may be willing to spend a little bit more on a device that has better specifications in certain areas (the higher-res cameras and the 32GB flash storage being the primary differentiators) the iPad still has a tremendous advantage in terms of applications.

Also Read: Motorola Xoom, Already Closing the iPad Pricing Gap?

Clearly, what Motorola Mobility needs to do is create another SKU for the XOOM -- a XOOM "Light". Same great Android taste, but reduced specs.

If iSuppli's BOM is to be believed to be within striking range of actual component costs, then Motorola can shave anywhere between 50 and 60 dollars off their manufacturing cost on the XOOM by slicing the flash storage in half to 16GB and going with less expensive camera parts, putting it closer on par with Apple's iPad 2. This would allow the XOOM to retail for about $50-$80 less than the entry-level iPad 2, depending on how close the company wants to cut their margins.

The only way XOOM is going to be a repeat hit for Motorola Mobility in the same way the Droid was for their handset business is to undercut the iPad 2 on price. With a lower price and a similar feature set to the iPad 2, a large segment of consumers might be willing to overlook some of the shorcomings on Android 3's current tablet app gap.

Does Motorola Mobility need to create a "Light" SKU for the XOOM to compete better with Apple's iPad 2? Talk Back and Let Me Know.

Topics: Mobility, Android, Google, iPad, Mobile OS, Networking, Operating Systems, Tablets, Wi-Fi

About

Jason Perlow, Sr. Technology Editor at ZDNet, is a technologist with over two decades of experience integrating large heterogeneous multi-vendor computing environments in Fortune 500 companies. Jason is currently a Partner Technology Strategist with Microsoft Corp. His expressed views do not necessarily represent those of his employer.

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  • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

    While I agree with you that the 'Xoom Light' you propose would be the no-brainer iPad market share thief, isn't it a bit too early to see if consumers and developers alike will be swayed by the Xoom's superior spec and open platform?
    marns
    • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

      @marns Nope. Consumers don't think in terms of open. Developers do. The problem is, developers also think in terms of how much money they can make writing apps. The wallet trumps openness every time, unfortunately.
      jperlow
      • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

        @jperlow Open is great if you're wanting to develop malware. Now while open does have its good points the risk of malware is a huge blight.

        Apple kicks apps out for a lot of reasons, The obvious ones (doesn't work, doesn't do what it says) the less obvious ones (makes illegal calls to private parts of the API) and the downright sinister ones (might upset the network, might upset copyright holders, Apple find it morally objectionable).

        I'm sure there are others, but these are the ones that stick in my mind.

        We're told the biggest set are the first ones, apps that crash, or apps that don't have the functionality they claim. I think pretty much everyone would agree these shouldn't be allowed.

        These would be allowed into Google's Android Marketplace.

        The second group, are a little more surprising, and many would not see a problem with these. The official reason Apple give is these parts of the system are not "fixed" and subject to change (both in updates, and future devices). Such changes could break application compatibility at any given moment. Apple want applications to work between versions. So better to reject the application and have the developer rework the application using only the official API than have it suddenly stop running for users who've paid for it, or (in the case of free apps) started to rely on it.

        These would be allowed into Google's Android Marketplace.

        The last group are the most controversial of all. Apple claim these are the smallest group. Rejecting these allows Apple to have a good relationship with networks and content providers, both of whom they rely on to give richness to the iPhone and the iTunes Store. Apple feel they must maintain these relationships to be able to bring compelling content to their stores and their devices. Apple want the iPhone to have a clean reputation, and to not be seen as a tool for potential nefarious activity. Apple want to keep the App Store "up market" and stop it from becoming "seedy". Apple make some "interesting" choices, denying some applications while allowing similar things from big name providers.

        These would be allowed into Google's Android Marketplace.

        This isn't just about money. It is also about preserving business relationships that add value to the platform. It is also about providing a consistent experience for customers, without unpleasant surprises.

        Such a black and white portrayal of the issues is overly simplistic. The reality isn't "open = good" and "curated = bad" or even vice-versa, it is far, far more nuanced than that.
        jeremychappell
      • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

        @jeremychappell Well that's an opinion. And one I certainly don't agree with. First, no checking, means quick fixes if a problem does occur which, believe it or not, is actually is quite common with software development. If you or your customers find a bug (not crash) in your app, it takes a while to get that updates out with Apple. You have to go through the process again. With Android, it can essentially be out as soon as you fix it. I like that. It's been quite helpful. Second, I like iBoobs. It's on Android. It's not on iOS. I like apps related to sexuality. I like being able to like whatever I want without somebody else deciding it for me. And don't say you can get that on the internet. Well I don't care where I can get it. It is most convenient to get it from the marketplace since apps are treated as a first class citizen by the Android OS. The entire OS is designed around making the best experience possible when interacting with apps and not interacting with websites. You don't have a website tray in the OS, do you? Much like my computer I want to install whatever the hell I feel like based on MY moral values even if that means it's some random hentai upskirt game. What I will say where Google is really screwing up is malware. Freaking run everything through a damn anti-virus you stupid idiots. Also, they do need to crack down on copyright violations to some extent. I am very much in favor a lot of copyleft ideas. Corporations should not be controlling how we express ourselves. However, I don't think the marketplace needs to resemble a warez site either. They need to find a balance there.
        StupidTechZealots-23432415690276115908309621553360
      • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

        @jperlow:
        All of Apple's competitors are so engrossed in doing what the iPad can do --- except with the Android OS, that they are igoring a glaring hole in what tablets really should be doing --- maybe replacing the basic full-function laptop.

        My basic Dell laptop has 4GB RAM and can run AutoCAD, LotusNotes, and MS Office while viewing information on the Internet. Can any of these new tablets do that? When (any) tablet is capable of doing that, is when they will become serious devices. Otherwise, tablets are basically larger versions of smartphones really meant for "light" business duties, but heavy on entertainment as seen with so many "simple apps" available.
        jlt0x
      • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

        @stocklone "What I will say where Google is really screwing up is malware. Freaking run everything through a damn anti-virus you stupid idiots. Also, they do need to crack down on copyright violations to some extent. I am very much in favor a lot of copyleft ideas."

        This goes to the heart of Android's dilemma and contradiction. Google purportedly "solved" their latest malware problem by remotely removing those problem apps from people's devices, without consent or prior notification. But, doesn't that run contrary to all of Android's pronouncements of "open"?

        The piracy issue should be troubling to any developer. The latest malware attack was spread by infecting legitimate apps and reposting them to the Android Marketplace. My understanding is that the developers notified Google about the pirated/infected apps more than a week before they were finally taken down. And they were taken down only after tens of thousands of Android devices had already been infected. How many other pirated apps already flagged by the legitimate developers still reside on the Android Marketplace?
        Woochifer
      • I submit developers think of "open" a whole lot less than

        OSS zealots would have you think they do. The only time a developer likes "open" is when it means he can get something without having to pay for it.
        fr_gough
      • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

        @jeremychappell

        I also do not agree with your opinion. Free speech, which is open, and often tramples over the sensibilities of many segments, is utterly and undeniably superior to censorship.

        If you applied the Apple Commandments to any other object in the world, you wouldn't be ok with it.

        Your TV? DVD player? Automobile? House?
        man_strosity
      • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

        @jperlow You're wrong. I know a lot of consumers that stay well away from Apple due to the barbwire they put around things. And they're not even IT people. They just hear things on mainstream media. And the number two argument is closed ecosystem. Number one is poor value.
        nicholas22
    • But the Tegra 2 is already lower spec than the A5?

      @marns

      In terms of GPU.

      1/3 of people getting an iPad even get one with a cellular connection. The most popular unit is the 16GB.

      Why will people suddenly decide to go for the high end units?
      Bruizer
      • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

        @Bruizer We really don't know how to benchmark the Tegra 2 GPU against the A5's PowerVR yet. I think it's safe to say the two are probably comparable in overall graphics and application performance.
        jperlow
      • We do know the performance between SGX540 and Tegra 2

        From the standpoint of GPU performance. These have actually been benchmarked.

        We know the specifications on the 540 to the 543MP2 based on Imagination data; and the 9X performance is a perfect lineup of the 535 to 354MP2 for FLOPS not to mention the 543MP2 drivers being part of the OS 4.3 delivery.

        The pieces are are there to make a very reasonable determination of overall performance.

        So based on that. A5 is the same CPU and between 2-2.5X on GPU compared to the Tegra 2.
        Bruizer
      • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

        @jperlow<br><br>The two may be comparable on paper who knows. But I will say I got to do some real-world test with the Xoom this past weekend. And I experienced some of the same issues that plagued earlier Android Tablets before it, and that's the issue of choppiness/lag when moving between screens. You never experience this with the iPad 1 with its much lower specs and low 256 ram. The Xoom have beefed-up specs and a gig of ram, yet it still stuttered. It's all about optimization.
        dave95.
      • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

        @Bruizer because many probably realized they wanted more when they ran out on the 16 Gig. hell i ran out on the 32 Gig.
        slickjim
      • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

        @Bruizer benchmarks tell half the story and supported features as well as optimized code can actually change alot.

        right now, the Tegra is delivering and the 543 as far as I know isn't yet in a tablet on the market.

        I think what we are going to see are half truths on a Sony PS2 level and then Graphics in basic games taking over with heavy multithreaded games showing much better performance on the 8 core Tegra 2 GPU.
        slickjim
      • @peter

        But right now the Xoom is not delivering on Flash, 4G, micro SD, smooth video playing, unstuttering UI and stability.

        In less than a week, the 543 will be delivering it's advertised capabilities. And the Tegra 2 devices are out specced out of the gate.
        Bruizer
      • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

        @Bruizer wait a second, I don't stuttering or poor video playback on my device, I get great video from both HD and DVD sources to play on my Xoom...

        As for Flash, 4G and Micro SD, maybe they aren't but at least I will have them within a few months, that Apple will never have them.

        Also, it will be hard to compare the two because of the lower resolution of the newer iPad won't stress the video as much. The Tegra is deliveing right now.
        slickjim
      • RE: Motorola: to compete against iPad 2, you need a cheaper XOOM

        @Bruizer
        the big issue with RAM and performance comparisons based of specs is that the iOS install is WAY smaller than Android 3.0 is. iOS "could" run 100% in RAM on every iOS device ever made. Android can only claim that on post 1.5 devices, and has actually almost tripled the install size of the OS, this actually decreases the performance in newer OS version on the same hardware (like windows typically does, the install size goes up and the performance goes down... although MS did get Win7 smaller than Vista... and note the performance went up too, on the same hardware).

        I am still waiting for Android to go completely to OS packages like every other *nix based system, if a particular daemon or library needs updating, they just publish a new version and you can update, you only need to install the entire OS when they make major system/config changes. I was hoping for this in 3.0 but apparently not (this would also allow Google to sidestep the Carrier update issue).

        on another note, I completely agree with this post, there needs to be a wifi only model with 16GB internal shipping with 3.0+ SD support and Flash at $450, or zoom will zoom right on out of the picture. It does not matter if users are starting to buy the more expensive models, you still have to offer the cheap ones to get them to even look at you...
        aiellenon
      • @jperlow

        Not running the current iteration of Honeycomb it isn't. All the reviewers are commenting on how buggy and unstable it is. This is the elephant in the room. Folks are going to go into a best buy, pick up a Xoom, play with it for a few minutes, get discouraged and put it back down.
        fr_gough
    • Pray tell, what the h*ll does open platform have

      to do with anything? It's nothing more than a feel-good nothing word. Here's what your developer sees: $2 billion in payouts to developers from Apple. Here's what your customer sees: Lots of cool apps at reasonable prices.
      fr_gough