The Tablet Price War Begins

SUREN on September 02, 2011

Things are unraveling so fast in the tech industry that it is almost difficult to keep up. One day, AllThingsD talks about the poor sales of the HP TouchPad since launch. The New York Times publicizes a report on the near-obsessive demand for the iPad. HP announces the retirement of its TouchPad, followed a few days later by a limited comeback of sorts. With the cheap $99 tablets flying off the shelves, speculation begins that Amazon may be the only player willing to under price its tablet and offer it for $300 apiece, gaining market share against the iPad and helping Amazon spread its tentacles into more wallets in the process. Then comes the shocker – Lenovo announces that it will offer its Android-based tablet for $199. Phew!

The tablet price war has begun, and it is going to reshape the tablet market (ok ok, the iPad market) quickly. However, given how much it costs to make these tablets, and given the low margins in the business, I have a lingering suspicion that Lenovo is under pricing its tablet for the same reason that HP did. Clear its inventory, perhaps, and cut its losses?

For all the noise by these corporations, I think there is only one clear winner so far – the consumer.