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The Tablet PC price premium - it's not all about price differences

Speaking of the low prices, here's a nice piece about how the often talked about price premium that tablets command over "normal" notebooks is slowly coming down. No real numbers, but those change often, and the phenomenon is really true: tablets are beginning to cost close to what a similar notebook would or does. So everything is fine and cheap Tablet PCs abound, right? (That sounds suspiciously close to Microsoft marketing). Well, not really. There are two factors to take into consideration:

  1. Tablets may now cost close to what a similar notebook would fetch, but those "similar" notebooks are usually pretty high or at least medium-level ones. These days, you can get a new cheapo laptop for, say $600-700. So where is the corresponding similar tablet, that costs about $800? There are none. And the much hoped for Averatec now seems a little pricier than expected.

    So while we could say that tablet features are costing buyers less, it doesn't mean that you can buy a cheap Tablet PC. That low-end category isn't quite there yet, and probably won't be until somebody like Dell commoditizes the space.

  2. There is also another angle. Right now, there are a number of OEMs pushing many models across several generations into sales channels. So we have tablets that cost, say $1,300 - because they are a first-gen unit, and ones that cost $2,500 or more, because they a fully loaded current unit. That provides a decent variety of price ranges. Well, at least some variety, anyway. There's a catch though: many buyers don't know about half (most?) these models. Your typical consumer these days probably equates "Tablet PC" to "Toshiba M205", because that's what's on many store shelves. As a result, they also equate "Tablet PC" to "$2,400 or so", which isn't really true, but they aren't being given a chance to correct that misconception.

    As a result, even though there are "affordable" tablets, the perception is that they Tablet PCs as a whole are expensive. Even dealers don't always have access to the full lineup to offer to their customers. In the end, the OEM/VAR complexities, lack of marketing, and poor retail availability lead to yet another misconception about tablets. And it's probably another one that is costing it sales.

For a very sobering and realistic perspective on this "decreasing price delta", take a look at this story from a Tablet PC MVP shopping around for mobile computers for two of his kids. And next time, when you hear the often repeated mantra about how tablets cost the same as ordinary notebooks these days, just remember that it's a little relative, depending on where you are on the price curve, and how educated you are about the Tablet PC market.

Published Jun 28 2004, 08:17 PM by peter
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Comments

 

peter said:

Very good points and perspectives, Peter. BTW: I ended up purchasing the Toshiba's - pretty nice units. Had I been able to get a comparable convertible tablet for $1400 - $1500, I would have and I think that's the price you will start to see tablet sales take off. It'll just take a while to get there.
June 28, 2004 11:53 PM
 

peter said:

cheap laptops are olny a relativly new thing, it took close to 10 years of "evlution" form them to come out
June 29, 2004 7:16 AM
 

peter said:

Dan, very true. In fact, only in the last year or two has that category really taken off. And, of course, tablets will get there too. But *right now* you can get a cheap laptop, but not a cheap tablet.
June 29, 2004 7:38 AM
 

peter said:

Well, you also have to factor in that cheap Tablets are bait and switch hooks. A 'cheap' TC1100, can run very expensive, when you (at point of sale) add-in HP’s super- inflated memory pricing. Cheap can also be not functional, works both ways too, as corners are always cut. But Tablets have to be looked at in view of the long-term value-add, and not in the up-front pricing. Just as Linux, “free” upfront, may not win the ROI wars, same argument applies here.

The key here, is the absolute commoditization of hardware, but such doesn't cancel out heavy competition. Success depends on becoming a differentiator, finding that key unique functionality.
June 29, 2004 8:18 AM
 

peter said:

Hi,
Well I see things differently than that. If I look at the Acer C300 in http://froogle.google.com you can find them for $1600-1700 but that is the very first model they produced - definitely not first gen hardware but more in the range of a laptop with a Pentium M cpu. Further if I look at the Acer C110 and say that will meet my needs it's going in the mid 1400's according to Froogle from many different vendors.

Even the Toshiba M200 starts off in the mid 1800's.

Further you've even got the Gateway M275's refurbished starting at $1300 at Tiger Direct or $1200 from PC Mall. That's the price point you asked for!

So I do see lots of opportunity for users to purchase a machine that will meet their needs if they really want to. However they just won't be the latest machine of the assembly line.

June 29, 2004 9:52 AM
 

peter said:

Chris D, see, exactly - those are pretty low numbers, which sort of makes the Averatec look pricey (and after all, it's not going to be super cutting-edge either). And like you said, if buyers "really want to", they can find these deals. But how many even know what the going rate is, what's too expensive, and what's just right?
June 29, 2004 9:57 AM
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