Tablet wars intensify as prices tumble

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The iPad Mini. AP FILE PHOTO

WASHINGTON – Tablet prices are plunging amid a flood of new devices and cutthroat competition for market share.

Amazon has slashed prices of its Kindle HD tablets to as low as $169 in the US and 139 pounds in Britain, while Barnes & Noble has cut the price of its Nook to as low as $129, and has announced plans to outsource production of its tablets.

“Since Hewlett-Packard launched its tablet, there has been a lot of pressure on prices,” said Rob Enderle, analyst with Enderle Group.

HP sells its Android-powered seven-inch Slate for as low as $139, helping make the paperback-size tablet computer an affordable commodity.

A Gartner survey suggests tablet sales globally will rise 67.9 percent to 202 million units this year, but analysts say the market is cooling after a couple of years of sizzling growth.

Gartner said the red-hot growth in tablets and smartphones will taper off as these devices gain longer life cycles. The report said many consumers are opting for “basic” tablets to cut costs.

“It looks like the market may be tiring of tablets and as makers get desperate, you may see more pressure on prices,” Enderle said.

Some retailers are selling tablets for less than $100, but Enderle said the flood of poor-quality devices may eventually backfire and turn off consumers.

Jitesh Ubrani, analyst at the research firm IDC, said many of the low-cost tablets come from small, sometimes unbranded “whitebox” vendors.

“The decline of the PC market makes it increasingly important for PC vendors to compete in the tablet space,” Ubrani said

“As more top-tier brands introduce low-cost products, we expect to see a reduction in the number of whitebox vendors.”

Even so, the analyst said, average prices for tablets is likely to drop further, and that tablet shipments are expected to overtake all PC shipments in 2015.”

The market leader, Apple, has so far kept above the fray, keeping prices steady on its iPad line of tablets, although it introduced the lower-cost iPad mini last year at $329, less than the $500 for its full-size iPad.

“Apple does not look at the competitive marketplace to determine its strategy,” said Jeff Orr, analyst with ABI Research. “They look at their buyers. Because of that I would expect their price points to remain consistent for the foreseeable future.”

Enderle said Apple is seeking to remain a “premium vendor” but faces a difficult choice — lowering prices, which can hurt its profits and worsen its share price declines, or giving up market share.

“Under Steve Jobs, when a product started to commoditize, they would come out with something new,” Enderle said. “Apple needs another premium product. It is overdue for whatever the next big thing is.”

Microsoft has also aimed at the high end of the market with its Surface, which debuted with a starting $500 price tag, but it has cut the price as low as $199 for education buyers.

Orr said some of the manufacturers may be forced out of the market if tablets are not part of their “core” business.

“Every brand believes it has an audience which will be interested in their device to connect to their ecosystem,” he said. “The reality is not every player can survive.”

Amazon sells its Kindles near the cost of production, in an effort to direct the buyers to Amazon content and apps. The others, including Apple, Google and Microsoft, also want to keep their customers tethered to an ecosystem for advertising and sales.

But Orr points out “there is none of that brand loyalty that some of these vendors had expected.” For example, an iPad user can still use Google, and Kindle users can buy from non-Amazon sellers.

Enderle noted that Google, which makes a $199 Nexus 7 tablet, “has a subsidized model in which advertising makes up the difference” of any lost profits from the device itself.

But he noted that Barnes & Noble faces an unusual predicament because it is primarily a brick-and-mortar bookseller, and needs to bring customers into its physical stores.

“Every Nook tablet sold causes them to lose a customer who might also go into the store,” he said. “They may need to go fully online and compete with Amazon.”

IDC’s Ubrani said it may be difficult for players like Barnes & Noble to compete with Amazon by subsidizing the tablets.

“Not every tablet vendor can afford to utilize this business model,” he said. “Yes, each can offer movies, music, apps, etc. to help subsidize the tablet, but none have the same scale and product selection that Amazon does.”

Enderle said that even though it seems to be a good time to buy a tablet, he advises people to wait.

“We are just short of a refresh” for many tablet makers, said Enderle. He expects new versions of the iPad, Surface and several Android models. Amazon is also reportedly working on new tablets.

“We will see a raft of new products in August and September,” he said. “Unless you find a really good buy. I would wait.”

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  • John Fereira

    Whoever give it free to the people will be the winner.

  • Descarte5E

    Time to cut the paperback and save trees.

    • CmdrAdobo

      but you consume of gas or emit lots of co2 from tablets.

      • Descarte5E

        The trees I save will absorb those CO2.

      • kangsongdaeguk

        But mining for the electronic components and the tailings?

      • Serom

        Advances in technology has its pros and cons, guys. We cannot stop these advances as the thirst in man to explore what is new and more advance is limitless. How about the greediness of the tycoons?

      • ThisGuy

        That’s easy for you to say. I voluntarily stopped my thirst when I noticed my monies slipping away.

        I hope it won’t be applied to a global, environmental context.

      • Serom

        What I mean is the research and technology advances involve. No company involve in technology would want to be left behind, thus, the high competition. It is also an opportunity for the tech giants like Bill Gates and the wannabes to make a fortune.

      • ThisGuy

        I said ‘context’-

        Ah, forget it.

      • Descarte5E

        I bought Winter of the Worlds, hard bound is the only available, over a kilo in weight, maybe 2-inch thick. One of the reasons why I’m thinking of moving into a tablet.

      • CmdrAdobo

        it consumes a lot of energy. battery charging.

        but the best tech for me is e-ink for reading books like the kindle.

      • Iggy Ramirez

        I’m intrigued about the e-ink. One of the reasons I’m apprehensive about acquiring a tablet is that any electronically projected text on screen strains my eyes and I feel very tired after reading.

        What is the technology of e-ink and has it caused straining to your eyes similar to what you would feel when you read off computer monitors?

      • CmdrAdobo

        i have kindle paperwhite. It’s the best reading device to the extent that i gave my ipad to my bro.

        Re: straining no because it looks like you are reading in a paper.

        It’s light. Lighter than the book and tablet.

        It doesnt generate heat.

        Refresh rate is slow, but then you read and u dont change a lot of screen.

        Battery charging, depends on your usage, but one charge per month.

        Come and get it. It’s cheap nowadays.

      • Iggy Ramirez

        Thanks. I never bought nor plan to buy any tablet for use similar to computers.

        I think I might give Kindle paperwhite a try.

      • WeAry_Bat

        yup, it’s the closest to cleartype in windows. however, don’t expect color in e-readers like no pictures.

        in tablets, we placed a screen protector placed on day one after being bought. i noticed it just blurred the text slightly enough to keep them from being sharp to the eyes.

      • Iggy Ramirez

        thanks for the heads up.

    • Lance Sundrich2

      I’d opt for the new Novo 8 Discovery tablet that launched in June — and is on sale this week for $159, normally $169 at T ablet Sprint – the Novo 8 Discovery compares to the 8-inch mini iPad and offers fast Quad core performance and Bluetooth connection… and the 8″ size is almost as compact as a 7″ tablet but offers 65% more screen space to play with, which makes quite a difference in user experience. It also offers MicroSD storage, 16GB Memory, HDMI, a front webcam & 2 Megapixel rear camera, a powerful 5000 mAh battery, and Google Play preinstalled with access to over 400,000 Apps — T ablet Sprint also features $25 in free Bonus Apps that include an MS Office suite and several premium 3D Games, including Shadowgun–

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