With the release of the new iPad, the company reduced the entry price of the iPad 2 to $399. That meant greater pressure on its rivals, forcing them to reduce prices to make their products competitive, IMS said.
Vendors have found few ways to differentiate their tablets. A low price seems to be the major factor in attracting consumers to buy tablets other than iPads, according to Gerry Xu, market analyst at IMS.
Low-end tablets have sold well and vendors with products in this category have helped lower average prices, according to IMS. Today low-end tablets typically have prices below $200.
Also, white-box tablet makers have lowered prices below that price point and have as a result have won widespread adoption of products in the first quarter, primarily in emerging countries, said Xu. However, to balance performance and profitability with a low price remains challenging for most tablet vendors, he said.
That point was echoed by Nvidia in a recent blog post, where the company said “it’s incredibly difficult to manufacture a low-cost tablet at all, even with a compromised experience.”
Expected upcoming products — such as the second version of Kindle Fire and the rumored Google Tablet — will mean increasing pressure on vendors of low-end tablets to enhance performance while still keeping prices low, according to IMS.
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