What price will consumers pay for a tablet?

The Apple iPad launches on Friday with the 16GB model at $499. This seems to be right at the top end price that people will pay and no one else can really compete at a higher cost.

At first I thought the Motorola Xoom pricing was reasonable for its specifications, but then I tried it out. As I wrote a couple weeks ago, any tablet over $500 cannot compete with the iPad and will just be a niche product. My buddy Kevin Tofel posted a great article on GigaOM Mobile that shows survey results about what price consumers will pay for a tablet and it confirms my current thoughts on the subject.

As you can see in Kevin's article, the "would definitely buy at that price" level is $351 while the "would never pay that much" price is $524. The T-Mobile Samsung Galaxy Tab that I have and love can now be picked up for $250 with subsidies. (Tip: Buy it this way and pay the $200 ETF if you want later for a cheaper price than buying it outright.) The 16GB iPad 2 will be priced at $499 and we just saw the first generation iPad sell out on Woot for just $329.

I remember thinking back before the first iPad launched, and even for a bit of time after, that the iPad was a "nice to have" device and there was no real need being met with the iPad or a tablet device. We have now seen over 15 million iPads be purchased by consumers and I have to admit that Apple seems to have created a market for the tablet. That said, it is obvious that Apple owns this market and I just don't think others can compete.

Apple has the benefit of economies of scale in production for the iPad and at this time no one else can compete on price. I like seeing competition because it usually drives innovation and improvements, but unless you are a die hard Android fan I really don't know why you would buy one instead of an iPad or iPad 2.