Future of Tablets

The $199 Tablet

An email to one of my sons in response to my comment about the base price of parts for tablets and Apple lack of a future in the tablet market–

I had predicted it would transpire this year (2011).  If Amazon does introduce their tablet this fall as advertised @$199 that will have been correct.  Until I heard the news regarding the Amazon tablet, I was delaying it until next year.

On eBay, one can buy a 10″ tablet for $150 from the Chinese.  One has to wonder if they are doing the rip-off of one of their private label brands? (The common practice of running extras then re-branding them.)
The HP pricing thing is B.S.  Good accounting demands they include development, marketing costs in their write down.  Parts on the eBay tablet cannot be that much less than the Touchpad.  Upgrade the parts on an eBay tablet and one is still around $250-$299 retail.  Shaving the margin one can get to $199 where the market sits today. By that I mean, mass market for tablets.
Sure Apple has sold 30 Mn tablets.  I have seen them for sale used on eBay.  I assume those are either disgruntled buyers or upgraders dumping the old one.  But, consider that HP sold it’s entire stock of a tablet which was considered to be inferior in less than 72 hours proves that price is a major driving force in tablet sales.
The bottom line on tablets– “they are gadgets.”
Most people do not need another gadget with money being tight.  The techies and the “cool” people can afford them, the rest of us can’t.  At $199 we start to think, “okay, maybe we can afford one.”  I’m sure this is not lost on you, “price point matters.”  Which is why I put the selling point at $199.  That is the price, in my opinion, tablets will sell in mass quantities.  That will not be lost on China.  The HP debacle will not be lost on manfg. in China.  Look for the $199 tablet to be available for Christmas from several brands, especially if Amazon hits the market in Sept. and is successful.
We bought a Nook.  We did not buy insurance on it, because we know that if it goes bad after 18 months, the new model will be less and better.  (Maureen uses it all the time to read books.  Only once in awhile does she go to the internet on it).  On replacement point, we might buy insurance on the new one.  I do have insurance on everything else I buy.  A Great point of Sam’s club is the extra insurance on the purchase, so it drives me to buy most electronic things from Sam’s.
I still believe the clam shell tablet will be a player in the marketplace.  Today they are ultralight computers like the Mac Air, but, soon, they will put the Intel ARM Quad Processor chip into tablets.  Still underpowered compared to a Core i7, but, that’s enough for the average mobile user.  Which then cuts the market into three segments- tablets, laptops and desktops.
The tablet market will hold most of the share with $199 and $499 clam shell quad models.  The laptops will be upscale Mac Air types for geeks and “cool people.”  Desktops will be quads will every bell and whistle.  The tablets will be capable of docking by wifi or blue tooth (technology will dictate docking) for home use too, which expands the capacity of them.  Overall, most items sold will be tablets @ $199.  The second market will be the mini lap top @$499.  In my opinion, 2014 that will be the market with over 50% share.
Remember, the 4″ screen smart phones provide a lot of people with enough.  Many will hardly use a laptop in the future.  Which means they might sync with home desktop or laptop “or not”.  Computing that you and I started with is dead.  The majority of people online today are there for social reasons and information.  Their need for large processors will dwindle as manfg. finds a way to put processing power in the cloud.  At that point the majority of people will use a tablet device to work in the cloud.  And, tablets will be commodity devices, as will the tablet/pc.  There might be a margin in ultra thin lap tops or high end desktops, but at some point Chinese manufacturing will have cut all the margins out of those products also.


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