The world’s best-selling tablet at the moment? Amazingly, it’s (probably) the BlackBerry PlayBook, the very device that until recently had clocked up less than a million cumulative worldwide sales and was considered one of 2011’s most high-profile technology flops. But it’s amazing what a dramatic price cut can do for sales. A 50 percent reduction across the PlayBook range and across most of its markets has seen RIM’s much-maligned tablet fly off the shelves, reportedly already selling out in India.
RIM has sensibly judged that it’s better to sell its tablet-sized white elephant at a loss than not sell it at all. It shifted just 150,000 full-price PlayBooks in its last quarter (down from 500,000 in the device’s debut period), forcing it to take a US$485 million charge related to its channel backlog.
Its strategy of clearing unsold devices via a dramatic price cut mirrors that of HP, which slashed the price of its discontinued TouchPad tablet in August last year and instantly saw a surge in sales that prompted the company to ramp up an additional final production run. According to recent figures from IDC, HP shifted almost 1 million TouchPads in Q3 2011 as a consequence, enough to give it – for one quarter only – a 5 percent share of the global tablet market.
The fact that severe cost-cutting of this kind can result in securing significant (short term) market share tells us two interesting things about the tablet market: firstly, that it is still immature and erratic enough to be manipulated by such pricing tactics and, secondly, that consumers are willing to opt for something other than the iPad if the price is right.
Lest we forget that the tablet market (in its current form) was “invented” by Apple with the launch of the first-generation iPad in 2010, and the device still accounts for almost two thirds of the market despite a plethora of copycat devices following in its wake. According to IDC, Apple sold 11.1 million iPads in Q3 2011, over ten times more than its closest tablet rival, Samsung.
The Android community hasn’t fared much better than RIM or HP in hanging onto the coattails of the Cupertino giant. Most high-profile Android-powered tablets – such as Motorola’s well-regarded XOOM and Asus’ high-spec Transformer Prime – have not competed aggressively on price and have therefore not made much of a dent in Apple’s market share. When Apple does appear to see a threat – as in the case of Samsung’s Galaxy Tab 10.1 – the iPad-maker has taken to the courts alleging copycat designs and demanding injunctions.
It has not helped also that – until recently – the Android tablet software was separate to the more widespread smartphone version, which often meant weak or non-existent developer support for the larger-screen Android devices.
But while it has yet to replicate its smartphone success, there are signs that Android-based tablets may mount a serious challenge to the iPad’s dominance in 2012. IDC noted last month that it expects Android to make “dramatic share gains” in Q4 2011, with tablets powered by the platform expected to account for over 40 percent of the global market in the quarter (up from 32 percent in Q3).
This increase is being driven by a new type of Android tablet typified by the likes of Amazon’s Kindle Fire and Barnes & Noble’s Nook Color – in both cases devices created by online retailers as a platform for selling their own content.
The Kindle Fire is arguably the most credible “iPad killer” to date. An evolution of Amazon’s hugely-successful Kindle e-reader, the device uses a forked version of Android and a customised apps store (in place of the much-maligned Android Market) that effectively serves as a storefront to Amazon.com. Priced at just US$199, opinion is divided on whether Amazon is making a wafer-thin margin on the device or losing as much as US$50 on each sale. But either way, the Kindle Fire is already a hit with consumers with estimates as high as 6 million sold in the run up to Christmas – a return that will dramatically redraw the tablets market share picture.
The Kindle Fire is currently available only in the US. Those on the other side of the Atlantic wanting a low-cost alternative to the iPad are advised to look here.
The editorial views expressed in this article are solely those of the author(s) and will not necessarily reflect the views of the GSMA, its Members or Associate Members