Apple, HP Rumors Indicate Tablet Price War Brewing
Hewlett-Packard may adjust the price of its upcoming tablet PC in order to better compete against the Apple iPad, according to a new report in The Wall Street Journal, as a recent wave of manufacturer announcements indicates that a price war may be brewing in the tablet space.
According to the Feb. 18 report in The Wall Street Journal, HP executives are slated to lock down details of their tablet PC, which was unveiled by Microsoft CEO Steve Ballmer during a keynote presentation at January's Consumer Electronics Show in Las Vegas. One of the items on their agenda, apparently, is to decide on how to best undercut the iPad's price point. Reports suggest that the HP device will run Windows 7, which includes touch-screen capabilities.
HP itself has been tight-lipped about specs for the device, which the Journal refers to as "the Slate." During the presentation at CES, Ballmer suggested that the tablet's capabilities would include e-reading, Web surfing and the ability to play "entertainment on the go," such as movies.
In addition to that HP device, Ballmer also brought tablets from Pegatron and Archos onto the stage with him; however, he declined to demonstrate the capabilities of either of the latter two. Other tablet PCs at CES included the Fujitsu Lifebook T4410, which converted from a traditional notebook to a multi-touch tablet thanks to a sliding screen, and Lenovo's IdeaPad U1 hybrid notebook, which features an 11.6-inch screen that detaches to become a tablet running a Skylight Linux-based operating system.
A number of manufacturers at CES declined to name definite price points for their upcoming tablet products, presumably waiting to see how the market developed throughout 2010 before finalizing those numbers.
At the same time, some e-reader manufacturers are positioning their products to compete more robustly in the tablet PC environment, as evidenced by Amazon.com's announcement of an SDK (software development kit) for the Kindle that would allow developers to create applications that leverage the device's wireless delivery and e-ink display. Amazon and Barnes & Noble have both introduced applications that port an e-reader interface onto other devices, such as the BlackBerry.
Throw into the mix smaller manufacturers like Fusion Garage, whose controversial JooJoo tablet PC entered full production on Feb. 3, and the possibility for a substantial price war exists within the tablet PC space, previously a niche industry.
Apple executives allegedly indicated to Credit Suisse analyst Bill Shope that they intend to be "nimble" with the iPad's pricing if customers decline to buy the device in mass numbers during its initial rollout within the next two months. That also gives Apple room to adjust the iPad's retail sticker if a price war erupts in the tablet PC space. While the iPad's price is lower than that of many Apple products, particularly its traditional PC line, analysts such as IDC's Susan Kevorkian see its cost as a potential disadvantage, particularly in the e-reader segment.
For the moment, though, Apple plans on retailing the 16GB version of the iPad for $499 with WiFi, and $629 with WiFi and 3G. The 32GB version has a price point of $599 with WiFi, and $729 with WiFi and 3G. At the top of the tier, the 64GB version will cost $699 with WiFi, and $829 with WiFi and 3G. Research firm iSuppli conducted a "virtual teardown" of the iPad earlier in February and theorized that Apple can expect a fairly substantial profit off the iPad, with the $829 version of the device costing $346.15 to build.
That profit may decline, however, if Apple lowers the iPad's price point to compete with offerings from other companies.