iPad 2 Pricing Will Force Xoom Price Cut

It's only a matter of time before Motorola and Verizon Wireless drive down the cost of the Xoom Honeycomb tablet, thanks to Apple's aggressive iPad 2 pricing.

Apple's iPad 2 has a few features in common with Motorola's Xoom Android 3.0 "Honeycomb" tablet, including a dual-core processor and dual cameras.

Of course, the iPad 2 is also slimmer and weighs less than the Xoom, but these may be mere trifles for consumers next to the price difference. Apple retained the same pricing scheme for its second-generation tablet as did for its first.

Accordingly, if Motorola and Verizon Wireless execs have any cause for concern, it's in the pricing, which threatens to undercut their Xoom sales. Verizon is offering the Xoom for $599 with a two-year deal, or $799 without a contract.

The $799 price tag is $70 more than a comparable 32GB iPad with WiFi+3G. Here's the kicker though: Motorola and Verizon executives could rightfully argue that the price difference was more than worth it over the first iPad because the Xoom boasted dual cameras and a dual-core processor, and is upgradeable to Verizon's 4G LTE (Long-Term Evolution) network.

The iPad 2 neutralized nearly every premium Xoom feature but the 4G network capability-which, while free, will be a hassle to upgrade to this spring.

So what are Motorola and Verizon to do? Naturally, they could slash the Xoom price point to make it more enticing for consumers. When asked whether Verizon would slash the Xoom cost, a Verizon spokesperson told eWEEK: "We don't discuss pricing or pricing strategies."

Fair enough. eWEEK is guessing the Xoom could drop to $499 on contract and $699 without. Analysts unilaterally agree the partners in Android will have to cut the costs.

"Will the Xoom come down in price eventually? Sure. But I wouldn't think it would drop as an immediate competitive response to the iPad 2, because the iPad 2 is priced identically to the original iPad," Current Analysis analyst Avi Greengart told eWEEK. "It's not like Motorola didn't know it was coming."

Industry analyst Jack Gold, who was underwhelmed by the iPad 2, told eWEEK the Xoom price will come down once the companies scale up production and the "early adopters" are taken care of. "And you'll also see lower-cost versions of the Xoom out soon-perhaps by CTIA [scheduled for the last week of March]."