How Cheap Can Tablets Get?


NEW YORK (MainStreet) — The cost of buying a tablet has dropped significantly in recent months as such companies as Hewlett-Packard (Stock Quote: HPQ), Motorola (Stock Quote: MOT) and Research in Motion (Stock Quote: RIMM) have slashed prices. But anyone holding out for a comparable price drop on a new iPad may have to wait quite a bit longer.

“Apple still has a pretty strong share of the market with the iPad,” said Tim Bajarin, a technology columnist and principal analyst for Creative Strategies, a tech consulting group. “By 2013 though, Apple may be in a position to be more aggressive on price.”

In the best-case scenario for consumers, Bajarin speculates that Apple could drop the price of the newest iPad – which sells for $499 in its most basic form – anywhere from $60 to $100 in 2013 at the earliest, but ultimately he says the iPad’s pricing is contingent on two major factors: competition and the cost of manufacturing.

There are more than 100 tablets on the market, but none have proven anywhere near as popular as the iPad. Bajarin speculates the competition could heat up in the coming year, though, as companies such as Amazon enter the market and Google begins to take advantage of its acquisition of Motorola Mobility.

As for the manufacturing costs, Bajarin says it usually takes tech companies such as Apple three years to produce a new product and streamline the costs to the point where they can begin to significantly lower the price. In Apple’s case, this is complicated by the fact the company is continually trying to improve features such as the screen quality, which brings up the cost of manufacturing.

This is why the only price change Apple has introduced to date was to drop the cost of the first-generation iPad by $100 after the newer model was released. Other companies, struggling to chip away at Apple’s market share, have become more aggressive in their pricing.

Motorola cut the price of the Wi-Fi version of its Xoom tablet by $100, to $499, in July and some retailers such as Amazon now offer it for as little as $476. Best Buy offered the BlackBerry Playbook tablet for $150 less during Labor Day weekend and H-P dropped the price of its 8 GB TouchPad by $400, to just $99. Meanwhile, early reports speculate that Amazon will release its own tablet for less than $499 later this year.

Even for these brands though, there are limits to how low the price of a tablet can go.

“Companies may be able to create tablets that are subpar on the screen, have minimal memory, only Wi-Fi and do not have a high-level quality processor and maybe they could price that somewhere between $350 to $400,” Bajarin said, referring to these products as the “good enough” tablets for consumers who want a lower-quality tablet for cheap. “But right now I am seeing the opposite – every company is chasing Apple.”

In the case of the $99 Touchpad tablet, Bajarin notes that H-P was willing to sell the product well below the manufacturing cost just to clear out its inventory after discontinuing the tablet. And Amazon’s 7-inch tablet, which is rumored to debut for as little as $249.99, is not a tablet in the traditional sense but will function more like an e-reader in the style of Barnes & Noble’s Nook.

For most new tablets, $350 may be the best consumers can expect in the near future.

—For a comprehensive credit report, visit the Credit Center.

Show Comments

Back to Top