Should iPad Rivals Sharply Discount Their Products?
But what if RIM and Android OEMs, such as Motorola and Samsung, sharply discounted their products to saturate the market and gain ground versus the iPad? Perhaps, but $100 is not a tenable price point when tablets cost $300 to $500 to build, analysts agreed. "No one can make any money selling a $100 tablet," industry analyst Jack Gold told eWEEK. "You can't build them that cheaply (at least, not with any quality or performance). And it's unlikely you can make up the difference with services (it's not like printers where HP and others give away the printers and make it up on ink/toner).""This is certainly not the way to run a viable business," Milanesi said. "We have been saying for a while now that Apple's competitors need to provide value beyond hardware especially given that they cannot compete on the hardware price." Gold agreed, noting that non-iPad tablets haven't sold because they can't compete with the overall experience of the iPad. "No one has been able to match the experience (or perceived experience) of the iPad," Gold added. "Having said that, there is no question that longer term, the gap between iPad and the rest will narrow considerably and probably disappear. Competitive pressures being what they are, once a product is released, your competition quickly tries to copy your success. And with all of the vendors (especially in the Android space) trying to copy Apple's success, eventually they'll get it right/get it close enough to win customers." At least, that's what Android OEMs, RIM and eventually Microsoft, when it brings its Windows 8 tablets to the table, hope. Milanesi said prices would have to drop 30 percent under the iPad to make consumers consider an iPad alternative today or remain competitively price if the platform ecosystem offered was comparable to Apple's App Store. For Android, salvation may come in the form of Amazon.com's tablet, which could be less expensive than the iPad and provide a comparable content platform of movie, music and application content. Epps is among a cadre of analysts who believe Amazon could sell a low-cost Android tablet priced at $250 to $300 and make up the difference in content and application sales, or advertising.
Gartner analyst Carolina Milanesi agreed, noting that the $100 TouchPad price point is simply about getting rid of surplus stock.