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February 22, 2011

The Coming Tablet Boom and Crash

As I've said repeatedly, any electronics company with a heartbeat and access to an LCD manufacturing capability is making Android tablets. It's this boom in production that will result in future ugliness for tablet manufacturers by the end of the year.

For some strange reason, Motorola thinks I'm going to run down to Best Buy and order/pre-order a XOOM for $800 plus whatever service/activation fees I need to tithe to Verizon Wireless. Not going to happen!

Sure, the XOOM has better features than a fully-loaded iPad and the option to upgrade to 4G LTE (News - Alert), but $800 is $800 and that's a fat chunk out of anyone's IT budget. I suppose it's a real nice bargain when you compare it to the Avaya (News - Alert) and Cisco Android Tablets, but I'm going to sit on my hands until I see something akin to the XOOM specs at around $500 or less.

If I can find a WiFi (News - Alert)-only tablet with XOOM-like specs at $350 or less, I might bite on that, too. I'd have to pay more to Sprint to occasionally turn my EVO into a WiFi hotspot, but that will save me money than paying for redundant 3G broadband capability.

(Which goes into a different conversation about how Sprint (News - Alert) and Verizon Wireless oversold "4G everywhere/everything," but I'm focusing on tablets for the moment).

If I wanted a tablet that badly, I would have bought an iPad at an earlier date. And nearly everyone who wanted an iPad at the current price points has bought one, less those who were anti-Apple, pro-Android, or holding out for a second-generation iPad with a front-facing camera for videoconferencing.

Apply the basic economics of supply and demand: 1) With a gazillion tablet manufacturers , there will be plenty of supply in the second half of this year moving forward. 2) While there might be a lot of demand for tablets, I doubt there's a lot of demand for tablets at $800 per unit, unless your previous pricing benchmarks have been Avaya and Cisco enterprise tablets.  

A glut of overpriced tablets is what I'm predicting and that's before we get into the dirty little secret that a lot of new tablets "demonstrated" at CES (News - Alert) in January were effectively under lock-and-key because they weren't even close to production-grade hardware. Name manufacturers including Panasonic, RIM, and Toshiba all "had" tablets, but you had a better chance crashing a party at the White House than getting a chance to hold and work with the hardware those companies had brought.

Now, everyone from Acer to Toshiba has Android tablets in the pipeline. Toss in RIM and HP tablets for good measure, and you're going to end up with a whole bunch of high-priced hardware hitting the market in the second half of this year and a limited number of buyers willing to pay top dollar.  

Tablet manufacturers will have to adjust pricing -- and nobody's sure what kind of flexibility is in there at this point in time -- to move units, or they will end up eating them. It'll end up being good for some bargain-shoppers, not so hot for manufacturers betting to make big bucks at $800 a tablet.


Doug Mohney is a contributing editor for TMCnet and a 20-year veteran of the ICT space. To read more of his articles, please visit columnist page.

Edited by Tammy Wolf
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