iPad Ignites Tablet Price Cuts

Apple's announcement in March, upon releasing the new iPad (a.k.a. iPad 3), that it was lowering iPad 2 pricing to $399 has forced other tablet computer makers to slash pricing on their devices as well. That proved to be a major reason for the average selling price of tablets falling 21% to $386 in Q1, according to IMS Research. In fact, low-end tablets priced below $200 are becoming more common even as demand has swelled, particularly in emerging countries, according to the research. Worldwide tablet shipments fell from the Q4 holiday quarter, though more than doubled from Q1 a year ago. (See also "Tablet Face-Off: Budget Models From Acer and Asus vs. Apple's iPad 2.") Research's Gerry Xu commented: "There are few innovations from vendors to differentiate their tablets; low price seems to be the major factor to attract consumers to buy tablets other than iPads. More vendors are expected to focus on the low-end tablet market. However, to balance performance and profitability with a low price remains challenging for most tablet vendors. " The low-end market is crowded by small and medium brands, plus white-box vendors, whose customers use tablets as portable media players, e-book readers and for GPS functions, according to the research. An anticipated new version of the Amazon Kindle Fire, the most popular Android tablet in the United States, could put pressure on these low-end market vendors to bolster their features.