Verizon Samsung Galaxy Tab Pricing Puzzles Analysts

 
 
By Clint Boulton  |  Posted 2010-10-21
 
 
 

Verizon Samsung Galaxy Tab Pricing Puzzles Analysts


Most analysts are surprised by Verizon Wireless' $599 price point for Samsung's Galaxy Tab, which is $100 more than the base model of Apple's popular iPad and only $30 less than the base iPad WiFi + 3G offering.

Verizon Wireless will begin selling the Galaxy Tab Nov. 11. No contract is required, though Verizon customers can add an access plan for $20 a month for 1GB. The device is equipped with a 3G radio.

"I was surprised at the high price point as well," industry analyst Jack Gold told eWEEK. "I expected more aggressive pricing. 3G should only add $50 to $100 max to the cost of the device, so I don't think that is the primary cost motivator."

When Samsung introduced its Galaxy Tab last month in New York, the light, 7-inch-screen device based on Google's freshest Android 2.2 operating system was well-received as an alternative to the iPad.

Unlike the iPad, the Galaxy Tab supports Adobe Flash, a boost for consuming Website content, and offers a front and back camera to enable video calling.

However, many believe that to compete with the popular iPad, which just sold 4.19 million units, the Galaxy Tab would have to come at a lower price point than its market-launching rival. The water-cooler talk was that Samsung and carriers would sell the iPad for $299 to $399.

That's clearly not the case for Verizon, which is unapologetic about its price point for the tablet. A Verizon spokesperson told eWEEK:

"Customers will ultimately decide, but we're comfortable with the price for what we feel is a very compelling product on the nation's most reliable network."

Current Analysis analyst Avi Greengart told eWEEK that while the Galaxy Tab is lighter and more portable than the iPad, consumers justifiably expect the larger iPad to carry a premium price and the smaller Tab to be discounted.

Analysts Debate Galaxy Tab Price on Verizon


 

This is especially true considering Verizon said it will start selling the iPad Oct. 28 for $629 with its mobile WiFi technology.

"At $599, Verizon must be thinking that the Tab is $30 less than the equivalent iPad/MiFi bundle at $629, but ... to be competitive on price, the Tab needs to be significantly less expensive," Greengart said.

Greengart added that the Tab is also suffering by comparison to Apple's least expensive and volume leader iPad, the WiFi-only version, which costs $499. There will be a WiFi-only Tab, but pricing and distribution for that has not been announced.

"Traditionally higher cost means either weak supply capability or high demand, so perhaps the price is high to limit the overall sales to a level they can support," Gold said.

"I'd be surprised if that is the case here though. I'd guess Verizon is just being overly cautious with the new product and new product category. ... We will have to wait and see how well it does, and what Verizon does to compensate if it doesn't do as well as expected."
 
Forrester Research analyst Sarah Rotman Epps isn't so surprised by Verizon's aggressive pricing.

Epps found that consumers who say they intend to buy a tablet say they expect to pay, on average, $530. In her view, Samsung's tablet at $600 with no contract subsidy is not outside the ballpark of what consumers are willing to pay for these devices.

"In the longer term, tablets will be susceptible to price wars just like every other commodity. Right now, though, consumers that are buying tablets care more about the experience of the device and the content they can access," Epps added.

That's another area where the iPad has Android-based tablets beat by a long shot. Apple's App Store sports 300,000 applications, 25,000 of which were designed for the iPad. 

 


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