News analysis: Price cuts tablet makers recently announced are nice. But the cuts are unlikely to increase sales of competing tablet models versus the Apple iPad 2. To gain ground against the iPad, competitors must find some way to offer a superior product.
Price is vastly important in
today's technology industry. With the economy the way it is and a growing
number of people thinking more about saving than spending, companies must
determine the right price point that will induce consumers to buy their
products.
As of late, several tablet
makers, including HP and Vizio, have made that abundantly clear.
Vizio's 8-inch tablet retails for $299, and HP was recently forced to drop
the price of its TouchPad to $399 and $499 for the 16GB and 32GB models,
respectively.
Those companies ostensibly
believe that they're onto something with cheaper pricing. They undoubtedly feel
that by offering lower prices than that of the iPad 2, they can get some of
those customers that don't want to spend $499 for the cheapest version of
Apple's tablet.
But what those companies
don't realize is that they're thinking is all wrong. Pricing their products
lower won't help their cause one bit. In fact,
it might end up
hurting them even more.
Here's why lower-priced
tablets won't succeed against Apple's iPad 2.
1. They're still expensive
Whether vendors want to
admit it or not, even at $400, their tablets are quite expensive. Today's
economy is not going all that well, and both consumers and enterprise users
aren't so willing to spend cash. At $400, many people view tablets that they
know can't compete with the iPad 2 as still too expensive. The Vizio tablet is
closer to where prices should be, but even then, there's debate about the true
value of a given tablet. Until these companies make customers see intrinsic
value to their products' design, even $300 or $400 might be viewed as too expensive
by some folks.
2. The difference isn't enough
Apple's cheapest iPad 2 is
currently on sale for $499, which means the HP TouchPad is $100 cheaper.
Considering most buyers are voting with their dollars that the iPad 2 is more
appealing than the TouchPad, HP would have needed to get more distance between
the devices to actually capitalize on its cheaper price. The fact is, with its
many more applications and superior software, the iPad 2 is a better bet. And
$100 isn't enough to get customers to think otherwise.
3. Android isn't up to par yet
Other devices, like the
Galaxy Tab 10.1 or Motorola Xoom, can't keep up with the iPad 2 for one key
reason: Android. When the Xoom launched,
Android's Honeycomb platform was viewed by critics as not even ready for a
public launch. Even Android 3.1, while much nicer, still feels less than
polished. But iOS 4 is nothing of the sort. Until Google's Android platform can
trump iOS, no price cut will change the opinions of customers who want a
superior product.
4. Neither is WebOS
If Android can't keep up
with iOS, what makes anyone think that WebOS is any different? HP's operating
system comes with some neat features, like being able to tap the tablet against
an HP smartphone to transfer content, but it still lacks all the applications
on iOS. What's more, the operating system is still an unknown quantity for many
customers. Apple's iOS, on the other hand, has won consumers' confidence. Until
HP can overcome that identity problem, even its latest price cut won't matter.
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