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.
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