Samsung Galaxy Tab Pricing Will Limit Success

For now, the Apple iPad still stands alone in the tablet arena, but the launch of the Samsung Galaxy Tab is impending, and many are anxiously awaiting the Android tablet. Unfortunately, for all its formidable features and functions, the Galaxy Tab misses the mark on pricing–and that will be the Achilles heel that prevents the tablet from reaching its potential.

Details of launch dates and specific pricing are still shady, but reports have emerged that both Sprint and T-Mobile will offer the Galaxy Tab at a subsidized price of $399 with a two-year contract. The information so far suggests a $200 discount for contractual commitment, and a $50 rebate, implying that the full cost of the tablet will be $650.

Samsung is pursuing a tablet distribution model that forces users into an unnecessary contractual commitment with an individual wireless provider–a relationship that will ease the sting of the initial cost of the Galaxy Tab, but ultimately add significant expense to the cost of ownership for the Samsung tablet. Assuming a $25 per month data plan, the contractual commitment would add $600 to the cost of owning the Galaxy Tab. Even a $15 data plan would bring the cost of the Samsung tablet to $760 over two years.

Applying the carrier-subsidized pricing structure and contractual commitment common for smartphones is a strategic error when it comes to tablets. To be fair, though, “forces” is a strong word. Users can get the Galaxy Tab without a contract, but with the price expected to be $650, it doesn’t offer a very compelling challenge to the $499 16GB iPad, or even the contract-free 3G iPad at $629–which enables users to activate and de-activate an AT&T data plan on an as-needed basis.

Meanwhile, Apple–which has already established the Apple iPad as the standard by which other tablets are measured–has a different strategy. With the addition of Target and Walmart, along with Best Buy and Amazon, Apple is saturating retail chains and online sites with its tablet. Everywhere shoppers look, they will see the Apple iPad, and that ubiquitous availability will serve Apple much more than wireless carrier subsidies will benefit the Galaxy Tab.

As impressive as the Galaxy Tab appears–and even those I know who have had an opportunity to work with a pre-production model have nothing but glowing praise for it–it is a crucial error to try and compete with the iPad at a higher price. People expect Apple products to cost a premium and it is just assumed that non-Apple products should be cheaper.

Samsung rival LG has opted to wait for Android 3.0 rather than trying to build a tablet on a mobile platform that Google has stated outright is not ready for the task. Combine that with the fact that the Samsung Galaxy Tab is significantly smaller than the iPad, and that the case is built with cheaper plastic components, and it seems reasonable to expect the Samsung tablet to cost less than the iPad–full price, without a wireless carrier contract.