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The future of the US$200 tablet

JR Raphael | April 27, 2012
The low-end, under-$200 tablet market is on the brink of a transformation -- and that means you'll soon be able to get a lot more value for a lot less money.

The Android tablet challenge

The million-dollar question now is whether Amazon's model of success can extend to the rest of the Android tablet market, which thus far has struggled to take off. While many analysts predict continued growth for Android overall -- Gartner, for example, forecasts Android tablet sales increasing eight-fold over the next five years -- some industry experts question whether playing the price game will be enough.

"Lowering the price on Android tablets will help, but that in and of itself won't sell the products," contends Sarah Rotman Epps, a senior analyst with Forrester Research.

Epps argues that products like tablets are as much about their interface as their hardware: You buy an Amazon tablet because it provides simple access to Amazon's content, just like you buy an iPad because it makes it easy to get and use stuff from Apple's iTunes store. The hardware matters, she says, but it isn't everything.

"Amazon has been successful because it does a great job delivering on the customer relationship -- the transaction," Epps explains. "A cheaper device from Google doesn't fix its shortcomings in that area."

Google may not have reached Apple's or Amazon's level of marketplace success, but it's working to get closer. The company has taken steps toward improving its mobile ecosystem over the past months, integrating its marketplaces for purchasing movies, books, music and mobile apps, and then rebranding it all as "Google Play". Still, fighting the perception that the Android tablet ecosystem is lackluster may be Google's greatest challenge in establishing itself as a major tablet player in the months ahead.

"Google has spent more than a decade training consumers to associate its brand with 'free,' and now they're trying to retrain consumers to transact with them," Epps says. "That's a hard sell. Part of making Android tablets successful is convincing consumers that Google has a marketplace where they want to do business."

Low-end tablet competition

One way or another, the lower end of the tablet market seems to be an area where Google thinks it can thrive. In the company's quarterly investors' conference call this month, CEO Larry Page acknowledged the success of "lower-priced tablets" using "not-the-full-Google-version of Android" and touched on the company's plan to pursue that segment of the market further.

"We definitely believe that there's going to be a lot of success at the lower end of the market ... with lower-priced products that will be very significant. It's definitely an area we think is quite important and that we're quite focused on," Page said.

Frequent Google partner Samsung already seems to be on the same page. The company just launched a new 7-inch version of its Galaxy Tab tablet that bears an eye-catching $250 price tag with hardware that exceeds the typical budget-tablet model. With that device and the even more attention-grabbing products on the horizon, we could soon see a change in the very notion of what a "low-end tablet" means.


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