Forget HP’s tablet dump — $99 pricepoint isn’t feasible, analysts say
Published 12:01 am Sunday, September 11, 2011
LOS ANGELES — Is $99 the magic number for tablet computers?
Tech giant Hewlett-Packard Co. couldn’t sell its TouchPad tablets until it reduced the price to $99, slashing hundreds of dollars off the original cost. Then they flew off the shelves.
The wildly popular promotion, in the wake of HP announcing that it was quitting the tablet business, may have some people thinking that $99 is the tipping point, when tablets will shift from being the coveted gadget of the few to an accessory that many people have, like a cellphone or laptop computer.
But for now, analysts say, $99 is not a realistic retail price for a tablet computer that isn’t a toy.
“The TouchPad was an anomaly in the market,” said Rhoda Alexander, director of monitor research at IHS iSuppli. “They are exiting the market and they’re losing a lot of money by selling the tablets that cheap.”
An HP TouchPad includes more than $300 in component parts, according to a tear-down analysis by iSuppli, not including software or labor costs. That’s similar to the $326 worth of parts in the runaway bestseller among tablets, Apple Inc.’s iPad 2.
“From a manufacturing standpoint, there is no way you can make a quality tablet for $100 right now,” said Kyle Wiens, co-founder of teardown expert iFixit. “It’s basically impossible. The cheaper tablets out there are very, very poorly made.”
The iPad — which had 85 percent of global tablet sales last year, according to ABI Research — now starts at $499, and analysts say it will probably remain at or near that price for the foreseeable future.
The HP Touchpad, pre-fire sale, was priced at $399 for the basic model.
But as tablets continue to expand their appeal beyond tech enthusiasts to average consumers, there is growing incentive to offer a good product at a more affordable price.
Price now ranks as the top consideration for 65 percent of people shopping for a tablet, according to a recent survey from Forrester Research. But shoppers might not have a realistic view of how much the devices cost in stores.
Apple iPad
Height 9.5 inches
Storage 16, 32 or 64 GB
Cost $499 to $829
HP TouchPad
Height 9.45 inches
Storage 16 or 32 GB
Cost $99.99 or $149.99
Samsung Galaxy Tab 10.1
Height 10.1 inches
Storage 16, 32 or 64 GB
Cost $499.99 to $799.99
Motorola Xoom
Height 10.1 inches
Storage 32 GB
Cost $499 to $599
HTC Flyer
Height 7.7 inches
Storage 16 or 32 GB
Cost $499.99 or $599.99
Source: Robert W. Baird & Co.
