Non-iPad tablet makers expected to slash prices to move inventory overstock
Faced with growing inventory due to sluggish sales, the makers of tablets competing with Apple's iPad are said to continue to cut prices in order to reduce losses, potentially sparking an industry-wide price war, according to a new report.
DigiTimes reported on Tuesday that non-Apple tablet manufacturers are having "weaker sales than their order volumes" after seeing shrinking retail demand. As such, the publication's sources claimed that companies will cuts prices by the end of September "to digest inventory and minimize losses" and are expected to trigger a price war within the tablet industry.
According to the report, most iPad competitors have seen "weaker-than-expected performance." Asustek, which is said to have had better performance than some of its rivals, took shipments of 700,000 tablets from May to July but actual sales reached 500,000 units.
Samsung and Motorola have also both reportedly seen sluggish demand for their tablet offerings. Meanwhile, Acer is said to be reducing orders in order to cope with slack demand.
Despite the fact that Motorola, HP, Asustek and Acer have all recently reduced their tablet prices, with the cheapest tablet currently selling for $370, sources believe there will be "at least two waves of price cuts from the end of September to the year-end holiday," reportedly bringing the average price level to $350 and possibly as low at $300 in the future. By comparison, Apple sells its entry-level Wi-Fi iPad 2 for $499.
HP slashed the price of its TouchPad tablet by $100, just one month after its release. The company had originally offered the deal as a weekend special, but decided to keep the discount after seeing increased interest and sales.
Tuesday's report also claimed that Research in Motion, which makes the BlackBerry PlayBook, and HTC are already "placing their hopes" in 2012. Last week, Sprint canceled plans to introduce a 4G PlayBook after the device failed to gain traction in the market. HTC CEO Peter Chou said last month that his company is "carefully assessing the tablet market" and plans to become more competitive next year.
Analysts have cautioned that Apple's tablet rivals will face struggles in competing with the iPad on price. Deutsche Bank analyst Chris Whitmore expressed concerns this spring that "non-iPad tablets will underwhelm" and will face negative margin implications if they undercut the iPad on price.
Recent teardown analyses from IHS iSuppli show that tablet makers had a difficult time cutting costs and achieving the same level of "design efficiency" as the iPad.
Apple CEO Steve Jobs said as much last year: "Our potential competitors [in tablets] are having a tough time coming close to iPad's pricing. iPad incorporates everything we've learned about building high value products?The proof will be in the pricing of our competitors' products, which will offer less for more."
DigiTimes reported on Tuesday that non-Apple tablet manufacturers are having "weaker sales than their order volumes" after seeing shrinking retail demand. As such, the publication's sources claimed that companies will cuts prices by the end of September "to digest inventory and minimize losses" and are expected to trigger a price war within the tablet industry.
According to the report, most iPad competitors have seen "weaker-than-expected performance." Asustek, which is said to have had better performance than some of its rivals, took shipments of 700,000 tablets from May to July but actual sales reached 500,000 units.
Samsung and Motorola have also both reportedly seen sluggish demand for their tablet offerings. Meanwhile, Acer is said to be reducing orders in order to cope with slack demand.
Despite the fact that Motorola, HP, Asustek and Acer have all recently reduced their tablet prices, with the cheapest tablet currently selling for $370, sources believe there will be "at least two waves of price cuts from the end of September to the year-end holiday," reportedly bringing the average price level to $350 and possibly as low at $300 in the future. By comparison, Apple sells its entry-level Wi-Fi iPad 2 for $499.
HP slashed the price of its TouchPad tablet by $100, just one month after its release. The company had originally offered the deal as a weekend special, but decided to keep the discount after seeing increased interest and sales.
Tuesday's report also claimed that Research in Motion, which makes the BlackBerry PlayBook, and HTC are already "placing their hopes" in 2012. Last week, Sprint canceled plans to introduce a 4G PlayBook after the device failed to gain traction in the market. HTC CEO Peter Chou said last month that his company is "carefully assessing the tablet market" and plans to become more competitive next year.
Analysts have cautioned that Apple's tablet rivals will face struggles in competing with the iPad on price. Deutsche Bank analyst Chris Whitmore expressed concerns this spring that "non-iPad tablets will underwhelm" and will face negative margin implications if they undercut the iPad on price.
Recent teardown analyses from IHS iSuppli show that tablet makers had a difficult time cutting costs and achieving the same level of "design efficiency" as the iPad.
Apple CEO Steve Jobs said as much last year: "Our potential competitors [in tablets] are having a tough time coming close to iPad's pricing. iPad incorporates everything we've learned about building high value products?The proof will be in the pricing of our competitors' products, which will offer less for more."
Comments
I don?t know if they can save enough, but some
Apple's competitor haven't got a snowballs chance in catching up!
People said that about Android when they saw the original G1 phone.
Most of these tablets will end up gathering dust in someone's drawer, closet, or end up as landfill. Shame on these companies for essentially wasting valuable resources and contributing nothing in the big picture.
People said that about Android when they saw the original G1 phone.
And since Android is still a money losing proposition and he iPhone is number one, I am not seeing your point.
Back to the story, I am not sure this creates a "price war" as having now test driven 4 of these non-iPad tablets, I wouldn't pay more than 25 bucks for anyone of them. If they drop the price that low though, the product doesn't even have potential value in a buyers mind, so what starts the price war?
Of course, that was very much the experience with the iPod, too.
Personally I was amazed at $499 price point and almost peed in my pants, though the presentation felt a bit underwhelming before that point for some reason.
And since Android is still a money losing proposition and he iPhone is number one, I am not seeing your point.
Back to the story, I am not sure this creates a "price war" as having now test driven 4 of these non-iPad tablets, I wouldn't pay more than 25 bucks for anyone of them. If they drop the price that low though, the product doesn't even have potential value in a buyers mind, so what starts the price war?
The early Android tablets weren't any good and neither were the early Android phones, but it didn't take long for Android phones to improve and to start properly competing with the iPhone and it probably won't take long for the major flaws with Android tablets to be fixed either. Don't just look at the current state of non-iPad tablets.
Back to the story, I am not sure this creates a "price war" as having now test driven 4 of these non-iPad tablets, I wouldn't pay more than 25 bucks for anyone of them. If they drop the price that low though, the product doesn't even have potential value in a buyers mind, so what starts the price war?
A price war for the bottom of the tablet barrel may end up being very, very ugly.
Look at what happened with the Personal Music Player (PMP) business. Some tried to compete with features (Zune HD) and others on price and in the end, it really didn't matter. Zune is dead. While you can buy a 4GB iRiver MP3 player for $25 (versus the 2GB iPod shuffle at $49), guess what? Apple still has something like 90% of the PMP market, including 99% of the market that the iPod touch covers.
Heck, cost competition isn't even driving sales of competitors' content. The iTunes Store is the dominant digital music store; Amazon has never gotten much traction and Wal-mart is shutting down their digital music storefront (Yahoo and Microsoft are a distant memory now).
The market would benefit from some credible competition to Apple's iPad and yet, it appears no one can get it done and worse, they are falling farther and farther behind.
Ah, more people hivhlighing apple makes more money on be product you brought than other companies made on competing products, as if a high margin is the reason to purchase stuff.
The key point is that Apple's customers don't care about such matters. It's not like they're reading SEC filings from Apple and their competitors and deciding which device to buy. They just buy what seems to be the best for their needs and if they don't like it, they have 30 days to return it.
The early Android tablets weren't any good and neither were the early Android phones, but it didn't take long for Android phones to improve and to start properly competing with the iPhone and it probably won't take long for the major flaws with Android tablets to be fixed either. Don't just look at the current state of non-iPad tablets.
But don't just look at the current state of the iPad either.
These tablets makers are using off the shelf hardware and Android. So, they have no REAL investment in the tablet space other than jumping on the bandwagon while talking sh** about Apple.
Ah, more people hivhlighing apple makes more money on be product you brought than other companies made on competing products, as if a high margin is the reason to purchase stuff.
First they weren't saying that high margin was a reason to purchase. they were pointing out that apple is able to be very competitive on the price and still make it profitable, which others can't.
Second, it's not a direct reason to buy. But the higher margins mean they have more money to spend on R&D to continue to improve. It means better support, which is important as we see more tablets drop out of the market and customers left with an obsolete product. It means a better app community and an ecosystem to continue to provide added value. So the more successful the iPad is in profit as well as simple volume, the better the customer experience.
So yeah. People will buy it because it's a better product, and it's a better product because it's profitable.
http://www.dzone.com/links/r/welcome...een_disab.html
This is not just 1 random case. There are many many cases like this since Nov. 2010.
I'm closing my iTune acct now... until Apple admits about the security problem and puts in some fix.
The early Android tablets weren't any good and neither were the early Android phones, but it didn't take long for Android phones to improve and to start properly competing with the iPhone and it probably won't take long for the major flaws with Android tablets to be fixed either. Don't just look at the current state of non-iPad tablets.
Please. The phone market is a different segment than the tablet market. Phones are (arguably) a necessity in today's world. Quite a few of them are literally given away for free, part of two-for-one deals, or very low entrance price. Android phones are so all over the place in terms of OS level and compatibility. Coming out with a new phone every five minutes does not help and in my opinion, and contributes to their "junk" status.
A tablet is not a necessity. People put more thought into it before purchase. Sure, the ones that opt for an Android tablet after seeing those flashy ADHD-afflicted ads, usually end up returning them back for a refund. Why? Because they do not see any value that an Android tablet brings to them. Even when priced cheaper to clear inventory, they just aren't selling.
What the iPad brings is evident considering the tens of millions they have sold. No need to discuss those reasons for the umpteenth time.
Better support from Apple? Read this one:
http://www.dzone.com/links/r/welcome...een_disab.html
This is not just 1 random case. There are many many cases like this since Nov. 2010.
I'm closing my iTune acct now... until Apple admits about the security problem and puts in some fix.
Right, because we all know how secure Android is.
http://www.zdnet.com/blog/security/a...ven-in-q1/8707
The early Android tablets weren't any good and neither were the early Android phones, but it didn't take long for Android phones to improve and to start properly competing with the iPhone and it probably won't take long for the major flaws with Android tablets to be fixed either. Don't just look at the current state of non-iPad tablets.
When you have Android in all it's various forms dumped onto every cheap POS phone on the market (as well as some very good ones) and add into the mix BOGO offers to get sales, market share of Android based phones doesn't look so impressive.
But tablets aren't phones either. People don't need tablets, much like they didn't need mp3 players. Apple dominates both markets by wide margins. Comparing the phone market to the tablet market is wishful thinking by fandroids, nothing more.
Better hope Ice Cream Sandwich fixes Honeycombs flaws AND developers start writing programs for these tablets, otherwise Google will be a quickly fading memory in the tablet arena.
Better support from Apple? Read this one:
http://www.dzone.com/links/r/welcome...een_disab.html
This is not just 1 random case. There are many many cases like this since Nov. 2010.
I'm closing my iTune acct now... until Apple admits about the security problem and puts in some fix.
And how many viruses and malware programs were found with Android and the marketplace this year alone. Nearly 50,000! If I have a choice between iTunes and the app store and the Android marketplace, the choice is obvious.
Have you noticed how anti-virus companies now have tons of google ads for their products for Android based phones and tablets? I find that a bit humorous.
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The early Android tablets weren't any good and neither were the early Android phones, but it didn't take long for Android phones to improve and to start properly competing with the iPhone and it probably won't take long for the major flaws with Android tablets to be fixed either. Don't just look at the current state of non-iPad tablets.
You are right -- but of course, the marketplace is NOT going to be fair.
>> What is happening, is an acceleration of the market we just saw skuttle the "Netbook" market.
All the manufacturers, fought to come out with the lightest $300-$400 Netbook they could create. The cannibalized any margins they had on Laptops, and created a product that, though it DID come down to a much cheaper weight and price point -- really left the customer underwhelmed.
The ATOM processor was NOT the Intel Duo by any stretch, and the MARKETING that killed the netbooks was "replaces the laptop".
>> Apple did NOT try and create another me-to Computer -- they created a lifestyle, that everyone could see filling a nitch. Your kid wants to get creative -- or grandma wants to surf the web -- or you want to scan in some grocery tag,... Apple's marketing goes after; "what are you going to be able to do with an iPad?"
>> So, whether ANDROID gets as good or better than the iPad/iPhone -- it doesn't matter. Because MOST of the manufacturers of these designs, are going to chase the LOWEST PRICE MARGIN --- so the customer experience is going to be; "Hey, I spent half the money I would have on an iPad..." which is faint praise when your device disassembles after being left on a hot car seat.
By NOT competing with Apple on "great experience" -- these manufacturers have doomed themselves to low profit pieces of junk.
>> The OTHER HUGE PROBLEM: Apple uses it's billions in reserve cash to guarantee important components at the best price -- so since the Android Manufacturers, MIGHT compete -- they cannot produce as good a quality device as Apple with the same margins because they cannot get the price/product guarantees.
Apple USED to be burned by all the PC manufacturers on components -- and they learned their lesson.
>> I expect that there will be a consortium of companies that sue Apple over "non-competitive business practices" -- since, even though Apple is competing fairly, they've created a situation where their HUGE cash reserves, design and marketing, means that it's almost impossible for other companies to compete.
Since our government and courts aren't interested in FAIR competition -- such a lawsuit will not succeed... and I recommend getting Apple stock whenever it takes a hit, because they OWN this emerging marketplace for the next few years, and every school kid is going to be using a tablet -- along with every doctor and nurse, and these things are the 21st century equivalent to a TriCorder on Star Trek.
>> The Advantage for Apple as well -- is not just the hardware, the marketing, or the hype -- it's that over a few years, the customer builds up so much software and STUFF on their phones and pads that there is "lock in." Just as Microsoft kept everyone on Windows with MS Office and VB Script.
If Google were savvy about this fundamental force -- it would create a "transfer to Android package" -- where they would scan your iTunes for equivalent apps, and the developers could give you free or discounted apps. Maybe some of the cost of the move would be subsidized by the Developer of the platform...
... anyway, I don't think that will happen. Google and many of their manufacturers are NOT really savvy in organizing things. Only the Music industry has only recently come up with a good alternative to iTunes after about 8 years - and it took a lot of disparate music companies COOPERATING to do it -- but only after they lost the digital music industry to Apple.
>> The "Walled Garden" of Apple is NOT a downside -- it's an incentive. And until the Android marketplace, can offer a "get into our Walled Garden with all your stuff" or they come up with an iOS emulator (but after they get burned on ripping off JAVA? No way in hell).