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Tablet prices, not quality must come down to compete

HP did something that hasn’t been done in the history of tablets or smartphones. They matched the consumers desire to purchase a new Apple product, without the Apple product. Lines that were seen across major retail chains such as Best Buy and Office Depot, to smaller electronics stores like RadioShack resembled a mid-June morning or a late-March evening.

The HP TouchPad, has become a must have item, and not only for the price. Archos, Pandigital, and a bunch of other obscure companies produce Android tablets under $100 and don’t grasp any kind of market share. Not to mention that the TouchPad is number 1 and 2 on Amazon’s top electronics list – at the original price of $399 and $499. That may be, however, a product of people believing that Amazon will refund their money, which may be ill-advised, as Amazon has not said if they will do so. Sure, many have purchased the TouchPad for the low price, or for family members, but the main reason for the rise of HP’s failed entry into tablet world is the hardware.

With a 1.2GHz dual-core processor, 1GB of RAM, Beats Audio, and the 104 x 768  screen — the same size as the iPad (you would be surprised how many non-tech people think 7-inch tablets are pointless) — the TouchPad may have the best hardware outside of Apple. To put the price in perspective, the capacitive touch screen, which is made by LG, in the TouchPad costs $69. What is widely considered the second best tablet on the market — surpassing all of the current Android tablets from HTC, Motorola, and Samsung — is selling for less than what it costs to manufacture it.

To compare any tablet to the iPad at the same price is futile. The iPad and iOS ecosystem is ingrained in our society, through almost ten years of cultivation, beginning with the iPod in October, 2001. To stand any kind of chance to produce a successful product, tablet makers will have to incur an initial loss in profit, for a gain in market share. HP could have easily withstood the estimated $100 million dollar loss to sell the TouchPad at $99 and $149 at its launch. Early sales estimates put the TouchPad at 350,000 units sold over the weekend.  The reception that the TouchPad is receiving now could have been amplified with an active WebOS community and support from the developer.

Android may be another factor in the astronomical sales of the TouchPad. With hardware that surpasses all current Android devices (Samsung Galaxy Tab 10.1 is the closest to it) on the market, Android developers are hard at work building a full port of Android 2.3, also known as Gingerbread. Newer Android tablets from Samsung and Motorola run Android 3.0 Honeycomb, but the source code is yet to be released by Google. But Ice Cream Sandwich (Android 4.0) is coming, and if the source code is released in a timely manner, those who bought the TouchPad to port Android on to it may have just got a tablet that is capable of running the next iteration of Android, for less than it would cost to purchase a smartphone running Ice Cream Sandwich.

The quality of the TouchPad, plus the price point, has given Android tablet makers something to think about. The Motorola Xoom moved 440,000 tablets in the 2nd quarter of 2011; The TouchPad will surpass that total in a little over a week. When you approach iPad sales numbers (the original iPad sold 300,000 on its opening weekend), something is going extremely right.

HP didn’t have to kill WebOS. Maybe it is part of their new strategy; maybe its expectations were too high; but if it was for lackluster sales, a price drop to even $200 would have dramatically increased sales. With sales come developers. With developers come users and so on.

Android already has developers and users. But to bring the surprisingly high amount of Android smartphone owners who use iPads away from the iOS ecosystem, prices must come down, without dragging quality with it.