Motorola Mobility confirmed the tech industry's worst-kept secret: The Xoom tablet with 32GB of storage and 4G capable will run you $800 unsubsidized. A Wi-Fi only version will run you about $600.
This disclosure by Motorola Mobility CEO Sanjay Jha, speaking at the Mobile World Congress in Barcelona, has sparked debate. My initial reaction is that the price is too high and that Motorola Mobility may have to come down. However, Jha has a different case. Let's hear the man out.
In defense of the $800 price tag for a Wi-Fi 3G-4G version, Motorola Mobility thinks it can fetch $800 because:
- The Xoom has a free upgrade to Verizon Wireless' LTE network (a big plus in my opinion).
- The Xoom at 32GB is only $70 more expensive than the current 32GB iPad.
- The hardware is competitive with the iPad.
The Wi-Fi only version will be right around the $599 price set by the 32GB iPad.
My take: Jha has a point about 4G and that is a big selling point for the Xoom. Motorola Mobility will be among the first tablet makers to offer speed and downloads at 50Mbps.
The other key decision here revolves around your faith in Honeycomb Android. The demonstrations for Honeycomb look swell, but the operating system is still an unknown commodity in the field. Meanwhile, there's a mental hurdle. I continue to believe that Android should price at a discount to the iPad.
Meanwhile, it's possible that the next iPad will have a 32GB Wi-Fi version at $499.
And other bet with the Xoom: To believe that Motorola Mobility can hold its pricing you have to assume that consumers will be discerning. That's no sure bet. Bottom line: The Xoom at 32GB will be compared to the 16GB iPad at $499 initially.
Stifel Nicolaus analyst Doug Reid said:
We remain confident Motorola Mobility will drive strong initial adoption of Xoom (at $799 unsubsidized) based as a first-to-market, 4G-upgradable (important) Android 3.0 product. We expect Motorola Mobility to launch lower price-point devices over the next 3-9 months and drive margin expansion.
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