Analysts Ready for Xoom Price Cut

However, Forrester Research analyst Sarah Rotman Epps, who has repeatedly gone on record saying the Xoom price point was too high from the start, said it's going to be tough for Motorola, given the component costs, "but it would make the Xoom more competitive with iPad 2."

Know what else would make the Xoom more competitive to the iPad 2? More applications. Apple CEO Steve Jobs gleefully pointed out at the iPad 2 launch that there are 100 Honeycomb applications, compared with 65,000 for the iPad.

Gartner analyst Van Baker believes that Apple's whole package with the iPad 2 is simply more attractive to consumers than the Xoom.

"Android is way behind Apple in the application space," Baker told eWEEK. "If you are comparing OS features, then the gap is not as significant, but consumers are not going to buy a tablet based on which OS it has."

Baker also argued that, by pairing the Xoom with a 3G contract, Motorola and Verizon are approaching the U.S. market the wrong way.

"The assumption by Motorola is that everyone wants to have 3G connectivity. In the U.S., that has not proven to be true. The percentage of tablet users that are actually subscribing to data plans is relatively low as evidenced by the iPad shipments versus the data plan signups that AT&T reported for the device in the last quarter of 2010. If you are happy with WiFi, the iPad is much less expensive, and most people are using the device where WiFi is readily available, such as a living room, classroom, coffee shop, etc."

It's unlikely Motorola will go long without a WiFi-only Xoom. Moreover, the Xoom won't cost $799 off contract for long. Carriers cut their prices for the Samsung Galaxy Tab when it didn't sell.

And now Samsung has said it will reconsider the design and cost of its Honeycomb-based Galaxy Tab 10.1, citing Apple's iPad 2 pricing.

Moreover, the market hasn't even seen the RIM PlayBook or HP TouchPad ship, so it will be interesting to see how those vendors price their tablets. Entering the tablet market and going up against the iPad-and now the iPad 2-is not an enviable exercise.