Rivals Need to Compete on Features, Not Price

By Don Reisinger  |  Posted 2011-08-11 Print this article Print

5. It's a sign of weakness

One of the biggest problems for vendors offering cheaper tablets is that consumers tend to believe they're not as nice as more expensive options, like Apple's iPad. The fact is, companies in any industry often price products cheaper because they don't deliver the same level of quality as those that are more expensive. Is that the case in the tablet market? That's up for debate. But consumers looking for a slate might come to that conclusion and quickly opt for the more expensive iPad that they've heard good things about.

6. It's the middle ground

The problem with cheaper tablets, like the TouchPad or the Vizio 8-inch option, is that they're caught between two boundaries. On the higher end is Apple's iPad 2-the benchmark in the industry-at $499. On the lower end, Barnes and Noble is selling its Nook Color for $249. So if users really want a cheaper option, they can go for that. The TouchPad and Vizio tablet, among others at their price points, are caught in no-man's land.

7. Customers are waiting for the iPad 3

Apple has done such a great job of promoting the iPad that customers are more concerned about waiting for the next big thing from the company than actually buying what's on store shelves right now. Recent rumors suggest a new iPad might launch as early as this fall. Now, some consumers, hoping to get their hands on the latest and greatest device, are waiting for that. So even though competing tablet prices are lower, there is still a group of customers that couldn't care less.

8. Lower margins aren't beneficial to anyone

One would logically believe that a company like HP, which priced the TouchPad at $499, had a margin that it was comfortable with at launch. But by dropping the price of the TouchPad, it should be quite interesting to see how much HP is actually making on its tablet sales now. The same can be said for other companies offering cheap options. At the end of the day, these companies have a responsibility to maximize profits and shareholder value. If they're pricing their products below the market and watching margins drop, they're not doing themselves or investors any favors.

9. It plays into Apple's market strategy

By dropping the price of their tablets and making the iPad 2 the more expensive option, the companies reducing prices are making a mistake. Apple's market strategy is always to be viewed as a premium provider of a premium product. By allowing it to take the lead on expensive pricing, competitors are doing just that. Against many companies, price cuts work. But that's not the case with Apple.

10. It's all about differentiation

When it's all said and done, the companies that want to compete against Apple need to do something special and not try to beat the iPad maker on price. Differentiation means everything in the tablet space. Companies that want to play on the same level as the iPad will need to deliver something different. Pricing isn't the way to do it. New features, exciting designs and outstanding software will take down the iPad-nothing else.

Follow Don Reisinger on Twitter by clicking here 


Don Reisinger is a freelance technology columnist. He started writing about technology for Ziff-Davis' Gearlog.com. Since then, he has written extremely popular columns for CNET.com, Computerworld, InformationWeek, and others. He has appeared numerous times on national television to share his expertise with viewers. You can follow his every move at http://twitter.com/donreisinger.

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