Just the other day, after HP pulled the plug on the TouchPad WebOS tablet after less than two months on sale, they offered them for $100 each. Customers lined up to get them, and they were soon out of stock. Was price the reason the TouchPad failed?
Consider the TouchPad in relation to the iPad 2. It was a huge failure at the same price or for $100 less. The reasons are obvious. In addition to having a somewhat unfinished OS, and a heavier and less comfortable form factor, there were relatively few WebOS apps available. Without the apps, a tablet is a useless blackboard. So customers ignored them, and many who bought TouchPads just returned them. Not a good beginning.
At $100, HP loses a bundle on those things, and I gather people bought them up out of curiosity, or just to have a cheap gadget on hand to see how it worked. I haven’t actually interviewed these people. It may also be that they simply couldn’t afford the real thing and had to take a cheap substitute that, on the surface, seemed similar.
But that didn’t stop some pundits from foolishly declaring that $100 is now the magic price for a tablet. The manufacturers should make the rush to the bottom, but they will only be able to do so by building junk. Just look at any of those cheap tablets from such companies as Archos, such as the seven-inch 70 and the 10.1-inch 101, and judge them against the iPad. And they cost a lot more than $100. Both use a version of Android not recommended for tablets. But if it’s all about price, I suppose you could do worse.
Sure, a cheaper widget may be one way for Apple’s competitors to get a leg up on the iPad, but it’s not easy. Apple has a corner on components, buying them by the millions and getting the lowest possible prices. Custom designs help reduce the cost of production too, which is why Apple makes a healthy profit on each iPad sale. That competitors had to struggle to meet the same price points with their “iPad killers” demonstrates that profits will be slim or nonexistent on cheaper gear. That is, unless the product is cheapened in other ways, such as having an inferior display, slower processor, and a less powerful battery.
Even trying to equal the iPad in price, while perhaps adding an extra feature or two, didn’t help the competition. The Motorola Xoom sold in the hundreds of thousands, and you don’t hear much about it anymore. Maybe there won’t be a big push from that company until after Google’s acquisition is complete next year. Indeed, when you visit Motorola Mobility’s site, you’ll see that the Xoom is listed after their smartphone lineup, which has been far more successful.
You all know that the RIM BlackBerry PlayBook was a failure out of the starting gate. The peculiar decision to require a BlackBerry smartphone to manage email made little sense at the starting gate. The promise that email would be added later on clearly meant the product was released before being ready for mass consumption. Consider the lame ad campaign. Rather than tout the benefits of a PlayBook, RIM concentrated on its alleged ability to run a bunch of movie trailers together, on a tiny screen, without skipping a frame. Maybe they hoped you’d realize the gadget had a powerful processor, but it doesn’t tell you about what you can really accomplish with the thing.
But that’s been the problem with those other tablets. The user base isn’t enough to encourage developers to build custom tablet apps, and you have the chicken and egg syndrome. Or you buy an iPad and be assured of over 100,000 apps optimized for the product. Besides, the ads at least show you can do interesting things, unlike all the other competitors that only understand hardware specs. Maybe they should be firing their ad agencies and try to contact the services out to a firm that can actually help them sell their gear.
Or maybe they need new product managers who might have a clue about what might be needed in order to compete with Apple. But selling gear at a loss, hoping to make it up, say, in app sales, isn’t the answer. If there are no apps, there’s nothing to make up. Besides, if you consider how much money people actually spend on apps for their iOS gear, there’s not enough profit left to cover such losses. Apple has wisely decided to sell their products at a decent profit, and offer the apps in a way that delivers the majority of sales income to the developers. Sure, Apple is earning a profit from their 30%, though probably not a large one when you consider the cost of building out a server infrastructure, processing orders, and paying merchant fees to the credit card companies.
Yes, some day someone might come out with a better tablet solution. But right now, the tablet market remains an iPad market.
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