Next-Gen Android tablets still can't hang with iPad on price

Next-Gen Android tablets still can't hang with iPad on price

Summary: There's definitely an effect that Apple is generating, but it's not a Reality Distortion Field. It's a Price Equalization Effect.

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TOPICS: iPad, Mobility
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Apple's advantage with the iPad? It's a Price Equalization Effect.

Back in November, ZDNet Editor-In-Chief Larry Dignan made an astute observation about the state of Android tablets -- they can't compete with the iPad on pricing. Not a single one of them.

Over the weekend, preliminary pricing emerged on the new Motorola XOOM, which looks to be the first legitimate iPad competitor in terms of feature set. It's an awfully nice sounding device, using Google's latest Honeycomb 3.0 version of Android, with a dual core nVidia Tegra 2 processor, high-resolution 10.1" screen, plenty of memory, and doodads galore.

The problem? Its unsubsidized full retail price at big box retailer Best Buy is likely to be close to $699.

My colleagues at ZDNet are split on whether the XOOM's pricing will make for a lukewarm reception in the marketplace. Jason O'Grady attempts to compare it to the existing iPad as well as the yet to be announced iPad 2. Matthew Miller insists we look at the specs of the XOOM itself and compare Apples to... uh, Apples, and that Cupertino's "Reality Distortion Field" has clouded everyone's judgement.

There's definitely an effect that Apple is generating, but it's not a Reality Distortion Field. It's a Price Equalization Effect. Apple is therefore PEEing on their competitors' tablet device parades.

When the original iPad was announced in January of 2010 for $499 for the base 16GB Wi-Fi model, that set the watermark for what ALL tablets should cost, regardless of specifications and speeds and feeds. That's the entry point, period. As a competitor you either come in at that price with better specifications, or you come in lower. Not higher with the same, and absolutely not higher with less.

Right now, we have no idea what the iPad 2 specifications may be, even though we can take a bunch of educated guesses about what might be under the hood. But I think we can safely say that trying to compare the XOOM to the existing iPad that is on sale today is a futile exercise at best, since we're very likely to get an iPad 2 announcement over the next few weeks, just before the XOOM ships.

One thing we can say about Apple is that they are fairly consistent about keeping prices standardized for base models across their product lines when they do yearly refreshes. So I don't expect the base model iPad 2 to cost much more than the one that is currently being sold.

We might see a slight variation, perhaps as much as a $50.00-$100 increase as we've seen with some of their other products, but I'm not expecting a $200.00 jump. Apple isn't suicidal, at the end of the day they want to move product. Apple also has the flexibility in that it can offer different flavors of the iPad (16GB/32GB/64GB, Wi-Fi/3G) to fit different consumer profiles and price points, as well as having a superior distribution channel overall.

Apple has not disclosed how their sales breakdown of the iPad went last year in terms of how many of each model were sold, but if I were a betting man, I would say that around 40 percent of their channel inventory was the $499.00 model and the rest was a mix of the medium and higher-end models.

Motorola and even companies like Toshiba, RIM, Dell and HP don't have the flexibility that Apple has in offering six different flavors of the same tablet device. At best, most of these companies can do two, one with 3G/4G and one without. Perhaps a 7" and a 10", such as what some of the Taiwanese/Chinese Tier 2 firms that exhibited new products at CES 2011 are doing.

That makes their ability to compete that much more difficult, since they have to put all their efforts into marketing one or two models, and it eventually has to force them down closer in price to entry-level iPad territory.

What does this mean for you and the consumer? I think it means that we can count on some very hard pricing decisions being made by companies like Motorola in the near future if they want to stay in the tablet game.

Are the prices of full-size Android 3.0 tablets going to equalize with the release of the next-generation iPad? Talk Back and Let Me Know.

Topics: iPad, Mobility

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: Next-Gen Android tablets still can't hang with iPad on price

    It's interresting that you point out that iPad comes in different flavor, then criticize the competition for not being competitive on price with only the most basic model of iPad.

    If you were to compare the model iPad that most closely matches the Xoom xpecifications, then suddenly the competition is in the ballgame.

    The problem, as you point out, is that the competition is entering without the base wifi only models that meet the low-end pricing threshold. I agree that the Android devices from multiple manufacturers will be hurting until they have products that can compete at all feature/price levels - and for now, the first true Android tablet (at least, the first to use a verion of the OS that Google promotes for tablet use) will be using 3G, making it only trully comparable to iPads that have 3G capabilities.

    Will future variants of the Xoom (or other tablets) be wifi-only and be priced competitively with the lower-end iPads? No idea here - but until they can effectively compete at both the full-featured and the base-model ranges, the Android tablets will be at a competitive disadvantage. Time will tell. But that's a slightly different position than the one that you are taking.
    DBEvans
    • Still not good enough. Yes, Apples rapes you for more memory, but,

      Android tablets MUST compete for the 499 price point or die.
      DonnieBoy
      • RE: Next-Gen Android tablets still can't hang with iPad on price

        @DonnieBoy
        I would even say they need to be $399. Your run of the mill consumer is not going to jump on a little known Android when they can have the iPad for the same price. Look at the Zune, basically the same as an iPod but no one wants a Zune when they can get the original for the same price. Android is going to have to beat the price to gain a foot hold.
        Kabcock
      • Kabcock: EXACTLY. Anything over 399 is a non starter

        NT.
        DonnieBoy
      • RE: Next-Gen Android tablets still can't hang with iPad on price

        @DonnieBoy
        Another good response, what happened to you lately? Your responses are becoming more matured anyway. Yes, Apple needs more memory, but Android Tabs must meet the rest of hardware like display, Galaxy Tab nowhere it matches iPad gen1 for that matter, and the price is heavy. I can get a iPad with 3G and WiFi with 16GB lesser than Galaxy Tab without contract. Also I have a facility to not get charged when I am not using AT&T 3G, OTOH I have to be on Data Contract with Galaxy Tab providers and becomes heavy monthly. I know this first hand because i own both.
        Ram U
      • RE: Next-Gen Android tablets still can't hang with iPad on price

        @Kabcock
        The first thing is anyone who pays over $199.99 for a tablet is retarded from the jump as there is no point as they aren't worh it especially the ipad. You then say look at the Zune which is an all around better device then the ipod and costs less.The zune loks better sounds better and runs better not to mention alot less fragile. point being tablets over $200 just arent worth it but it does allow the world to spot idiots quicker as they carry those worthless $600 devices around in a stupper. lol
        Fletchguy
      • RE: Next-Gen Android tablets still can't hang with iPad on price

        @Fletchguy How about you put a disclaimer before your post..."The following is based solely on the opinion of an obvious small minded hater".
        non-biased
      • RE: Next-Gen Android tablets still can't hang with iPad on price

        @DonnieBoy After XOOM inaugurates Honeycomb with a super high-end device, we will see a lot of lower-end tablets from different manufacturers. <br><br>ASUS said they will release a dual-core+honeycomb one starting at $399. <br><br>I bet HTC will also have an entry-level one. <br><br>And Motorola said they will release an lower-end, Wi-Fi only version; I think it will be priced to compete with the $499 iPad, and released close to the iPad 2 announcement, just to steal some spotlight. <br><br>The most important thing for Android right now is to focus on marketing the improved user experience. By the time lower-end Honeycomb tablets are out, users will already be amazed by the gorgeous interface and saying things like "I want a tablet with that slick holographic visual". <br><br>For now, they just need to build awareness. Have you noticed that rumors about the iPad 2 disappeared recently, or are too boring compared to every leak or news about Honeycomb? Posts like this, and the fact that Honeycomb is being hyped on every tech blog on the planet through rumors and news and leaks, is a sign that Honeycomb is in the right path to build good user awareness. <br><br>When the entry level devices from ASUS, HTC, Samsung, Dell, Motorola, Toshiba etc hit the market, users will be in love with Honeycomb and it'll be a huge hit.
        BioNerd
      • RE: Next-Gen Android tablets still can't hang with iPad on price

        @DonnieBoy You're a born loser on this subject DonnieBoy. Those that make the parts set the price. If it's on quanity, the supplier wins on any comparable device. If the supplier (like Samsung) makes the parts for your device (iFad and iPwn'd4), then they not only make money selling you, your parts but selling their devices too. Samsung broke all time records for their Electronics Division alone. Don't forget they are the #1 Multinational Electronics Conglomerate on the planet compared to #19 by asset value. Meaning that artificially overvalued Market Cap of CrApple is as bogus as a three dollar bill! ;) ....and that's just one of the companies CrApple has to worry about. CrApple own iCrAppleholic Stock Guru says Android phones and TABLETS will eventually rule the planet!

        Acer w/ it's two Dual Core Tablets says (#2 computer company in world)!
        "In August, the chairman of Acer predicted that Apple's iPad will eventually drop to just 20 percent of the total tablet market when competing options are introduced. He said Apple's "closed platform" iOS mobile operating system will ultimately be the downfall of the iPad."

        Even Gene Munster says Android will go ahead of iOS Tablets!
        http://www.intomobile.com/2010/10/11/android-tablets-outsell-ipad/
        i2fun
      • RE: Next-Gen Android tablets still can't hang with iPad on price

        @Kabcock Um. <br><br>"Little known" Android? Normally I don't care about "keeping up with the Joneses" (they don't pay my cell phone bill, I've noticed), but Android has rapidly overtaken almost every other smartphone OS. Android is TIED with iOS and RIM for total market share. To say Android is "little known" is obviously incorrect.
        clokverkorange
    • But why it does not matter...

      @DBEvans

      You can offer an option that no one wants and make other options more attractive. People will compare the iPad's WiFi only price to the 3G Android's price every time when making the decision because we do not really control all of our thought processes like we think we do:

      http://www.ted.com/talks/dan_ariely_asks_are_we_in_control_of_our_own_decisions.html
      Bruizer
    • RE: Next-Gen Android tablets still can't hang with iPad on price

      @DBEvans The thing that will kill the Xoom is that Apple will move the 16 GB current WiFi iPad down to $399 and start the new one at 32 GB at $499. Gonna be tough to compete with that. Even more tough if Verizon sells a cheap MiFi like now also.
      tymiles
      • Exactly

        @tymiles: very astute observation. yes, that is what Apple did with the iPhone 3GS when iPhone 4 came out. SOP. cuts the low end bargain-shopper competition off at the knees.

        and the Samsung Galaxy tab has consumed most of the Android fanboy/early adopter market already too, who were willing to pay a premium price and wait for real tablet apps just to get an Android thingee. that doesn't leave much of a hard core buyer market for a $700 Xoom now. just the rich kids.
        AlfieJr
    • RE: Next-Gen Android tablets still can't hang with iPad on price

      @DBEvans
      Viewsonic gTablet - $379 - All the features of the base iPad + Tegra2 dual core ARM processor, camera, real USB ports, SD expansion, etc. And, being an Android device, it can be rooted and customized in any way you want, which is a good thing, since the Tap-n-Tap shell that comes on the thing stinks. Though, the latest update made it a wee, tiny bit more useable.
      Dr. John
      • RE: Next-Gen Android tablets still can't hang with iPad on price

        @Dr. John But as with all Tegra 2 tablets that have come out so far it has hardware issues.
        tymiles
      • RE: Next-Gen Android tablets still can't hang with iPad on price

        @tymiles
        I've had zero issues with mine. And, none of the others I personally know that have one have had any issues, either. I did, however, have to exchange two iPads for having no battery life, at all.
        Dr. John
      • The moment you say &quot;rooted and customized&quot;

        the product is DOA in the consumer space. This is something the tech head talkbackers here will NEVER understand.
        frgough
      • RE: Next-Gen Android tablets still can't hang with iPad on price

        @Dr. John
        The key thing is the utter simplicity of tablets+apps. frgough is spot-on. Rooted and customised? Tablet users want something they can poke with a finger and it does stuff. If I want to do computer things, I use my high end custom PC. If I use my iPad, I want it to operate with moronic simplicity. It does, and is a brilliant holiday companion. If I want to edit video, or produce slick presentations, PC.
        bargeemike
    • RE: Next-Gen Android tablets still can't hang with iPad on price

      @DBEvans sorry but the competici?n hard times are not over, it's not because they don't have a comparable product or better the thing have to do more by the side of compromise, first with the size, then with the carriers and the worst part is with the profits which is key in the equation, like Jason has point out, the six flavors gives Apple a huge flexibility because of that the can sell and entry level at 499 which I'm pretty sure is partly subsidized by the other models, which is I think why they charge a lot more for 3G models, unless the competion can match price points with at least four flavors they are in serious trouble trying to match sales even with this so called "better tablets". And the nightmare continues when iPad 2 comes out and the entry level price goes further down if they keep one of the first generation models still for sale like the iPhones as TYMILES has point out before me.
      humb1962
    • RE: Next-Gen Android tablets still can't hang with iPad on price

      @DBEvans
      If it were wifi only then I think it would bet the iPad but what about the "rumored" iPad2 to release this year. Whats that gonna cost and whats the specs on it? Compare prices then and see which is better.
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