Remember when laptops came on to the market? 8″ Monochrome LCD screens, 20MB hard drives, tiny keyboards, no sound, and the 40 pound weight that came along with them? It was crazy. The only thing crazier than the monstrous portable machines were the price tags that went along with them. Soon after launching, laptops began to come down in price and up in performance. Fast forward to today, where laptops have all but replaced desktops, but at what cost?
The mid 2000’s saw the rise of the ‘jumbo laptop’ computer. One that had dual core processors and more RAM than most desktop models of a year earlier. 2 to 4 GB became the standard, with 320 or 500 GB hard drives. Built in card readers and 17″ widescreen displays were thrown in to enjoy all that media on the go. But, this created a newer problem, they weren’t all that portable anymore.
Taking a look online, the same trend continues with tablets and touch screen devices. At first the smartphone was perfectly happy with a 2.5″ screen, smaller amounts of memory and a few apps. Now, the first 4.5″ smartphone has launched on AT&T, if it’s not a dual-core, it’s yesterday’s news and 32GB of internal storage is becoming the norm.
The tablet wars are just getting started. The iPad began it all and hit stores at $499. With its comfy size, good performance and the ability to play Angry Birds on a really big screen! Then the iPad wasn’t enough, there was a need for something a bit more portable, but with a screen that was still bigger than those 3.5″ phones. Bring on the Samsung Galaxy Tab and its 7″ display. A nicer form factor, and a bit more friendly on the pocketbook at $429.99.
Then some interesting characters appear from various manufacturers all sporting the $400 to $500 price range. This was starting to look good. First the pioneer, then the follow up to make them ‘mainstream’ and then the competition appears. This always means lower prices and more choices… But, not in this case…
With the Motorola Xoom hitting store shelves in a Wi-Fi only version for $600, the BlackBerry Playbook coming in just over that for the 32GB version, the competition doesn’t seem to be affecting pricing at all. In fact, the cheaper, more limited tablets seem to be pushing the elitist ones higher.
The problem with this is that the higher tablet prices mean less sales long term. To steal a page from Microsoft’s playbook, if someone like Samsung were to release a 2nd generation Wi-Fi driven 7″ Galaxy Tab and skimp a bit on the internal memory – maybe dropping to 8GB – pulling the 7″ display back to 800×480 and adding some subsidized software – think of if Samsung got paid by Skype to pre-install it on all their tablets – and run that out at $199.99, they would start selling a ton of them. As it sits now, most of the 7″ Wi-Fi Galaxy Tabs are going to end up on roll back at Wal-Mart around Christmas time for $299 or less.
Taking in to account that the tablet market is ‘new’ and Apple has a nearly unbreakable hold on said market, the other manufacturers need something special – and better performance, niftier packages and carrier deals aren’t going to cut it here – to break that hold. They need that price point to drive their stake in the industry. Everyone is afraid to ‘lose’ money and the component costs for the Samsung Tab at launch was $205.
Selling them for $200 didn’t make sense at launch, but with the removal of the cell radios, the cost has to come down a bit. By lowering the internal memory, screen resolution and other factors, they can cut the cost further. All this comes at a minimal cost to performance. It’s time for the manufacturers to start realizing that the shelf life on a product like the iPad, the Xoom, the Galaxy Tab is very short. Value lines will start coming forward, and be better quality. It’s time for the manufacturers to carve their niche, and do it quickly.
Tablets are too expensive right now. They will continue to be expensive until someone makes a value line that has a big name. Look at how many ‘new’ users flocked to the iPad when the 2 came out, simply to get the deal on the original one? Look at how well the iPhone 3Gs sells today, simply by chopping the price down to $49. If the Tablet manufacturers learn anything, its that they need to have market saturation before bringing out the ‘elite’ customers. Lower the prices, create a value line, sell more units. Pretty simple marketing, and you know what, keep those pricey ones for when the customers are in the store, for the upsell, you’ll probably end up selling more of those too.
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