Apple iPad Likely Immune to Tablet Price Pressure

By Wayne Rash  |  Posted 2011-09-27 Print this article Print

People simply aren't going to pay $500 for a Samsung tablet when they can get a very similar device for $199. As a result, the average price level for good-quality Android tablets will ultimately sink to that level. In fact, the word ultimately may be overstating things. I wouldn't be surprised to see price reductions in the tablet market in anticipation of the Christmas season releases of the Kindle Fire and Nook Color 2.

So by the end of the year, tablets in general will be cheaper, especially for models with 7-inch screens where all the competition is. The price shift may take a little longer for 10-inch tablets. But perhaps this is an area where Apple will lead to a new pricing environment for the larger devices.

Think about a scenario in which Apple releases the iPad 3 sometime early in 2012, but rather than simply closing out the iPad 2 line, it reduces the price and continues to sell them. This is essentially what Apple did with the iPhone 3GS after the iPhone 4 was introduced. The advantage of this to Apple is that it gets to keep its market share intact, while not letting the price of its premier product erode.

If Apple were to follow a strategy for the iPad similar to what it did for the iPhone, then we'd see the iPad 3 on sale for the $500 that you can currently buy an iPad 2, and the latter would then be reduced to something like $300. This pricing strategy would force the 10-inch Android tablets into that price range as well, since it would be hard to convince most customers to pay more for an Android tablet than for an iPad.

Of course, it wouldn't have quite as much of an effect on the 10-inch tablets, especially the Android tablets that exceed the iPad in features. You can already see this in phone sales where many 4G Android phones sell for a higher subsidized price than the iPhone 3GS. A few even sell for more than the iPhone 4. But those all have 4G data capabilities, which the iPhone doesn't.

So the result is that there will still be expensive tablets out there that people will still buy. But the general level of tablet prices will drop, and as a result, more people will buy them, regardless of what Apple does with the iPad. No matter how you look at it, this general broadening of the tablet market is a good thing, and it will make for a nice Christmas. 

Editor's note: This article was updated with the official price that Amazon announced for the Kindle Fire on Sept. 28.

Wayne Rash Wayne Rash is a Senior Analyst for eWEEK Labs and runs the magazineÔÇÖs Washington Bureau. Prior to joining eWEEK as a Senior Writer on wireless technology, he was a Senior Contributing Editor and previously a Senior Analyst in the InfoWorld Test Center. He was also a reviewer for Federal Computer Week and Information Security Magazine. Previously, he ran the reviews and events departments at CMP's InternetWeek.

He is a retired naval officer, a former principal at American Management Systems and a long-time columnist for Byte Magazine. He is a regular contributor to Plane & Pilot Magazine and The Washington Post.

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