The Android HP Slate 7 might signal good news for Microsoft

The Android HP Slate 7 might signal good news for Microsoft

Summary: With the introduction of the HP Slate 7 (a pretty decent Android tablet for very little money), HP has firmly kicked off the race to the bottom on Android tablet pricing. But that could be good news for Microsoft.

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TOPICS: Tablets
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About a year ago, I had bought a newly released Nexus 7 and wrote a review on it. The "tl;dr" version of that review was: "Why would you not find the additional money and buy an iPad?"

HP Slate 7
The HP Slate 7 is a decent enough Android tablet for very little dough.
(Image: HP)

When HP announced the release of the Jelly Bean HP Slate 7, I bought one to have a look at.

But events of the past year have encouraged me to take a more nuanced view with regards to the Slate 7 and its sibling low-end Android tablets. Specifically, just like Android phones are now mature and decent enough to play well in the market against the iPhone, Android tablets are now good enough to hold their own in the tablet market against the iPad.

The iPad is still the best tablet on the market, and if you happen to have the available cash, it's still the one to buy. However, if you're definitely not going to buy an iPad (or even a Windows tablet, which we'll come to), buying a Slate 7 actually is good value for money.

Fine

In the US, the 8GB HP Slate 7 can be yours for $170. (In the UK, I paid £129, including VAT.)

Also in the UK, the 16GB Nexus 7 can be yours for $200.

If you're in the market for a $200 tablet, both of these are fine. They're both basically the same device. The HP has the edge on build quality, and also has a rear-facing camera and expandable storage, whereas the Nexus doesn't. The Nexus also has a higher-resolution screen, and the Slate's screen is decidedly murky. Seeing as the whole point of a tablet is the screen, that counts for something.

So, sure — it's fine. The Slate 7 is "fine". And the Nexus 7 is also fine.

Cheap

With regards to cheapo Android tablets, we need to think of a couple of things. Whilst you have been able buy dirt cheap Android tablets for very little money, the market now has the option of two devices that are very good. Three, if you include the Kindle Fire, which for this argument we might as well do.

Unless we now live in a parallel universe, where market forces don't apply, downward price pressure on decent Android tablets now seems like a certainty. As consumers, we can now look forward to average selling prices (ASPs) on low-end Android devices drifting lower.

HP appears to have deliberately priced the Slate 7 to be price competitive with the Nexus 7. That tells us how old school OEMs are thinking about this new market opportunity. Spoiler: They're looking at it in exactly the same way that they've been looking at the PC market.

A couple of days ago, Benedict Evans, a freelance market analyst, tweeted this chart. It shows the rate of decline of PC ASPs since 1995.

Benedict Events - Global PC Market Trends
Over the past 17 years, PC unit sales have gone up, but average selling prices (ASPs) have gone down.
(Image: Benedict Evans.

Ignore the numbers on the chart — just look at the trend. (The ASP numbers include Apple Mac ASPs, which tend to push a "whole market" view higher.)

That tells you very clearly that people buying PCs and people selling PCs are in cahoots. People — business and individuals — want to spend the least amount of money possible to get a "good enough" piece of kit. The OEMs have got pretty good at supplying cheap, commodity hardware into a market that's indifferent to premium kit. (And, of course, the vast majority of the market is indifferent to premium kit.)

The question is to me is: Why would HP, which knows that the "pile 'em high, sell 'em cheap" method basically works for it, not intentionally repeat history and just try to win the game by trying to sell masses of cheap kit at razor-thin margins?

That seems to be the whole strategy with the Slate 7. Get a good enough product into the market by way of a "foot in the door". There is, after all, no point in letting Google just have the whole market.

Windows

So, what happens if we mix Windows in with this? DigiTimes recently ran a piece saying that "ex-factory" prices of white-box Windows 8 tablets will come in at around $300. After they get through the channel, end-user pricing is around $500. A health warning though: DigiTimes can be a bit hit and miss with its analysis.

But those DigiTimes numbers seem to be backed up by the fact that we know Windows RT devices like the Lenovo Yoga 11 is available for $549 on Amazon. Those companies that are able to make them like to see street prices of around $500 for an ARM-based Windows tablet.

Make them smaller and use an x86 chip rather than ARM, and you can likely trim the price, but can you get a 7-inch Windows tablet down to a street price of $170? My ZDNet colleague Ed Bott recently wrote up the Acer Iconia W3-810 tablet, which leaked on Amazon. This is an 8.1-inch Atom-based tablet. Probably yours for $380.

There's no way that x86-based Windows tablets are going to end up at $150-ish anytime soon, which suggests to me a market where you end up with $150-ish Android tablets at the low end, and a premium sector that's made up of iPads and Windows tablets at round $400-ish

That seems to be where things get complicated.

If the market is driven solely by price, how well does Apple do in competition with a proper, "full-fat" Windows PC at roughly the same price? I think the iPad is a truly fantastic device, and every Windows tablet-like thing I've ever tried has disappointed me, but if you want to spend around $400 on a piece of kit, why would you buy a less-functional iPad when you can buy a more-functional Windows tablet? The logical decision in that scenario has to be to buy the Windows tablet.

That idea ignores the fuzzy effect of the ecosystem. The point of an ecosystem, like Apple's with the iTunes/App Store ecosystem, is to lock in customers. Does the iPad ecosystem count for something when choosing not to buy a Windows tablet? That might control the situation somewhat; otherwise, it applies downward pressure on iPad prices toward the nominal price set by Android tablets.

(The corollary point there being around whether Microsoft can replicate the success of the Apple system.)

Ironically, then, it seems to me that Microsoft does pretty well out of a "race to the bottom" Android tablet market by potentially removing some of the cachet around the iPad, and making the selection of a Windows tablet more logical, whilst also justifying an average selling price double that of an Android tablet by offering a great deal more functionality and capability.

Although, even in that context, I don't believe in "one device to rule them all". Tablets are good at some things, PCs are good at others. If you have the need for a PC, it doesn't necessarily follow that your totality of needs are satisfied by a tablet-esque PC — people are likely to have both.

And, of course, the set of people who can do quite happily with a tablet and no PC grows bigger every day.

What do you think? Post a comment, or talk to me on Twitter: @mbrit.

Topic: Tablets

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48 comments
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  • Something for everyone

    - When those PC ASP's came down under $ 700 dollars, you saw an explosion of sales. Walmart started selling them on pallets in the middle of the aisle, next to the cat litter. Instead of household members sharing a PC, it became commonplace for each person to have (at least) one computer.

    - While these low end tablets are good for the kids and people just trying out the ecosystem, many others will want tablets with higher hardware specs and that includes Android tablets as well.

    - Android is now the OPEN platform, while Microsoft is closing Windows.
    SunFire23
  • There's More Money To Be Made From Android Than Windows

    One glaring difference right now is the pandemic apathy among Windows OEMs and resellers: more than one Microsoft fan has tried to put the blame on them for the lacklustre reception to Windows 8 and Microsoft's mobile efforts generally. Contrast this with the Android market, which is going gangbusters, and where the pace of innovation has reached high-fever temperature.

    The reason is that, as PC prices decline, Microsoft and Intel are ending up with a larger and larger share of the profits, leaving everybody else with peanuts. Android is not like that, because there is nobody in that ecosystem with monopoly power comparable to Microsoft or Intel. This means that Android remains more profitable, which is why OEMs continue to invest so much more in it, and why new players continue to join in.

    In short, your idea that Android's success is anything other than detrimental to Microsoft is, shall we say, a little far from reality.
    ldo17
    • Really ??

      Only Sammy benefited from android while no other OEM saw profit using android. These windows OEMs are blamed because they couldn't provide good hardware in market, merely copying apple in hardware side and tag them with high price won't help.
      Vish2801
      • Re: no other OEM saw profit using android

        Lots of other OEMs are profiting from Android. Even Sony, with all its current woes, has a mobile division that is doing well from Android devices.
        ldo17
        • You should check your sources

          Sony may be using Android on a few devices, but they are bleeding money on all of them.

          Take a look at HTC ... working in the red since they starting making Android phones.
          wackoae
          • Re: Take a look at HTC ... working in the red

            Actually HTC, with all their troubles, are still in the black.
            ldo17
        • Kinda wrong, kinda right

          If you aren't Samsung, though, you aren't making much money at all from Android.
          Michael Alan Goff
          • Re: Kinda wrong, kinda right

            Compare the profit margins of Asus (doing nicely out of the Nexus 7, among other Android products) with the thinner ones of the more Windows-centric Acer and Lenovo (not to mention HP and Dell), and you can see what a breath of fresh air Android is to margin-starved Windows OEMs.
            ldo17
          • And yet

            It isn't helping them make a lot of money.

            What's your point?
            Michael Alan Goff
    • Android going gangbusters? Look again, because, when it comes to tablets,

      it's not doing so great.

      You might be thinking about how good Android is doing with smartphones, but this discussion is about tablets, and Android ain't doing go great there, other than perhaps, the Kindle.

      Android had a 5 or 6 year head-start against Windows, but in time, Windows should easily surpass Android in the tablet market, and soon afterward, in the smartphone market.

      Android will be dead in about 4-5 years. ;)
      adornoe
      • With what WMD...

        You sound like Kim Jong-Un and Nikita Krushev...

        Windows is not that mighty anymore... even less... the Windows NT model is not fit for the mobile market due to too many complexities on the driver side and the filesystem side.

        Linux and Apple's Darwin (based on Carnegie Mellon's Mach) are much more compact and have simpler boot methods which help keep battery life long and API space short.

        Most people say that iOS and Android are not REAL OS... but that's because they don't know the underpinnings.

        iOS is the real successor to NextStep (not Mac OS X) and Android is just another Linux distro in disguise.

        Dave Cutler's VMS bastard son (Windows NT) has nothing to do in this camp.
        cosuna
        • Sorry for the word bastard...

          ... but I was speaking of Digital VMS not on Dave Cutler, which I admire and respect a lot and would never use such a word for an actual son of his... it was metaphorically speaking and only on the technological realm... I'm sorry if anybody could have misinterpreted that comment.
          cosuna
        • BTW...

          I always tell my friends that Windows 3.11 and Windows NT 3.5.1 was made by Rolling Stones fans... NextStep and Windows 95 by U2 fans... Windows XP by Nirvana fans... Windows Vista by 'N Sync and Backstreet boys fans... Windows 7 by Coldplay fans... and Windows 8 by LMFAO, Dubstep and Skrillex fans...

          They always laugh when they see the comparison between NextStep and DubStep... considering the former ran on a cube with a DSP built for CD quality audio and the latter just sounds like a scratched CD... go figure...
          cosuna
      • actually...

        android tablets are slowly catching up in sales to iOS tablets while windows is still in the bottom of the market... YOU sir should go re-check YOUR facts.

        "Android will be dead in about 4-5 years. "
        Can you also tell me the lottery numbers for next week, since you obviously can predict the future?
        ukjb
      • Re: Android had a 5 or 6 year head-start against Windows

        No it didn't. Windows was around, and being promoted for mobile devices, long before Android was even conceived.

        Android succeeded on its merits, where Windows could not.
        ldo17
  • Inclined to disagree

    1. The 'race to the bottom' Android devices are likely to take away MSFT's traditional WINDOWS base on cheap devices. (Look how MSFT reacted to netbooks - successfully eliminating *IX variants.)

    2. Going head-on against APPL at the high price point is a very dangerous strategy when you are a long way behind in ecosystem, perception and physical stores. Plus SURFACE alienates all your former OEM allies.

    3. Old-school Windows users want a cheap tablet with Office (on ARM) ... and the ability to plug in peripherals (big screen, keyboard, disks, ...). That's the winner.

    It's all bad news for MSFT at present. They need to give WINDOWS users what they want before desertions to Android and APPL reach tipping point.
    jacksonjohn
  • Eye catching title, then wishy washy writing...

    How is it good for MS?
    Socratesfoot
    • Worst budget article I have seen in a while.

      Did spell check stop on your iPad. I think Apple would be insulted by this article, almost every paragraph contains some kind of mistyped word. The truth is Apple is a high price niche producer, they always have been. Microsoft has always been the PC for everyone types and now they want to be the high end niche with Apple. Android has out Microsofted Microsoft. They created a system just like Windows on the PC.
      I would comment more but with statements like "But that good be good news for Microsoft" and the sentence "Ironically then it seems to me that Microsoft does pretty well out of a "race to the bottom" Android tablet market by potentially removing some of the cachet around the iPad and making selection of a Windows tablet more logical whilst also justifying an average selling price double that of an Android tablet by offering a great deal more functionality-slash-capability." which happens to be one of the longest sentences I have seen in a long time.
      alex_darkness
      • niche

        niche = an overpriced.. oh wow look at me product... just for the very rich and very stupid..
        broblk@...
    • The only good for MS is ...

      ... that MS is making more money out of licensing patents to Android makers that they are making from selling licenses of WP8.

      Other than that, the author is pulling logic from a used porta potty.
      wackoae