Tablet manufacturers slash prices due to fierce competition
With an avalanche of tablets and new devices flooding the market, there is cutthroat competition in the table segment. A Gartner survey suggests that tablet sales will increase this year by 67.9 percent to 202 million units but some analysts say that after a couple of years of massive growth, the segment is slowing down.
An article by TOI, suggests that players in the tablet segment such as Amazon, HP have all introduced low cost tablets. Barnes & Noble has cut the price of its Nook to as low as $129, and has announced plans to outsource production of its tablets.
Rob Enderle, analyst with Enderle Group says since Hewlett-Packard launched its tablet, there has been a lot of pressure on prices. He added that since the market is flooded with tablets, people are getting tired of the device, leading to the drastic slashing of prices.
According to Gartner, the growth in the tablet segment will reduce as soon as devices have longer life cycles.
Jitesh Ubrani, analyst at the research firm IDC is of the opinion, that average prices of tablets will drop further in the future, resulting in overtaking PC shipments in 2015.
However market leader Apple, has maintained a strong stance against their pricing policy by refusing to bog down its ipad prices. Apple introduced their ipad mini in 2012 at $329, less than the $500 for its full-size iPad. The reason being that Apple doesn’t look at the fierce competition in the market but they only look at their core customer base. This is why they are a “premium vendor”.
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.
Most tablet manufacturers feel that their brand value will lead to customer loyalty. For instance, Amazon sells its Kindles at the cost of production hoping to direct customers to Amazon content and apps. Similarly, Apple, Google and Microsoft rely on advertising and sales to keep their customers loyal to their brand.
The tablet war has led many analysts to believe that not every player can survive in this tough market segment. For example, Barnes and Noble cannot complete with players like Amazon because they are brick-and-mortar bookseller and they need their customers to come to their store. For every customer who buys a kindle they lose out.
It remains to be seen what companies like HP and Amazon have in store by the end of 2013, and how other smaller players will operate in the near future.
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