By Harry McCracken | Monday, January 24, 2011 at 11:32 am
Motorola’s upcoming Xoom tablet is going to cost $699. Or maybe $799. Both prices are rumors rather than confirmed realities, but they seem to point to the Xoom starting at a much higher price than the iPad, which costs $499 in its most minimalist configuration (16GB of storage and no 3G).
If the Xoom goes for $699–or maybe even $799–it’s not because Motorola has grossly overpriced the thing. Specswise, it’s a far more potent device than the iPad, with a dual-core processor, four times as much RAM (1GB vs. 256GB), a slightly larger screen with more pixels, two cameras vs. no cameras, a MicroSD slot, and a standard 3G data connection that will be upgradable to 4G for free. Motorola clearly decided to err on the side of making the Xoom beefier than the current iPad–an entirely logical strategy given that it will surely compete with an iPad 2 that boasts some of the same specs that it does. But anyone who hasn’t bought an iPad because $499 sounds like a lot of money is even less likely to spring for a Xoom.
Meanwhile, Samsung’s Galaxy Tab has dropped to $549 or $499, depending on the carrier. (You can get one for less if you commit to a two-year data contract, but paying for tablet wireless service every month is a sign you’re a spendthrift, not thrifty.) The Tab is different enough from the iPad that exact price comparisons are tricky–the fact that it’s much smaller, for instance, can be counted either as a plus or a minus depending on your perspective. But it still has the same starting price as an iPad, not a lower one.
Back in the period after the iPad had been announced but before it shipped, it looked like there might be a bevy of alternatives at much lower prices–chipmaker Marvell was even talking about $99 tablets. Hasn’t happened yet, but I still think that there are plenty of people who’d be very interested in, say, a decent $299 tablet.
Why aren’t Apple’s competitors beating the iPad’s price yet? I can think of several reasons:
Maybe the iPad is cheap. Apple’s competitors like to operate under the assumption that Apple caters to style-obsessed cultists and charges them a stiff premium because…well, because it can. But if the iPad price includes obscene profits, you’d think that someone would attempt to gain market share by undercuting it sharply.
Maybe tablet companies don’t think tablets are mainstream yet. It’s standard industry practice to introduce new types of products at high prices–knowing that the earliest of early adopters will cheerfully pay them–and then slash the sticker price to one that less nerdy consumers will find reasonable. Perhaps tablet companies still don’t think tablets are ready for normal folk.
Maybe other companies can’t match Apple’s economies of scale. Apple has sold almost 15 million iPads; Samsung has shipped 1.5 million units of the Galaxy Tab, which is probably the second biggest tablet hit to date. As the Business Insider’s Pascal-Emmanuel Gobry notes, it’s easier to make a nice profit on a product when you buy parts by the gazillion, as Apple does. And 9 to 5 Mac’s Jonny Evans says that Apple is acquiring components in quantities that may make it tough for its rivals to get the parts they need at reasonable prices.
Maybe Apple’s competitors are letting Apple define what a tablet should cost. Some companies that are readying tablets, such as RIM and Toshiba, aren’t talking about prices other than to say that it’ll be “competitive.” For now, “competitive” probably means starting at $499 or thereabouts. But if Apple’s next iPad comes in at $449 or $399, the definition of “competitive” could change quick.
Got any other theories? If you haven’t bought a tablet yet, is there a price that would get you excited?