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The fire sale of HP's TouchPad indicated the pent-up demand for a low cost Android tablet, but Amazon has shifted the entire pricing structure for the fledgling category by launching a device which costs only $199 without discounts.

Its move will pressurize all Android vendors to lower their prices, although the shift is unlikely to affect the iPad, which is perceived as the premium product in the segment. The dilemma for other OEMs is that few of them have Amazon's flexibility to endure razor-thin margins (or even losses, according to some reports) on its hardware, because its main aim is to drive increased content sales.

Samsung and HTC have integrated apps/media stores for their tablets and phones too, but these are far less advanced than Amazon's. Yet the retailer has set a new price bar, certainly for the smaller slate size, which will be hard for other suppliers to ignore. UK consumer research group YouGov believes £250 ($385) is the price point at which tablets become mass market items, and clearly the Kindle Fire is well below that threshold.

Russell Feldman of YouGov told Bloomberg that the Fire's "compelling features and even more attractive price" would make it "very hard indeed" to compete with. 'This is the mountain Android-based tablets need to climb, but by launching a rival ecosystem at an extremely competitive price, Amazon is likely to make a rapid approach to the summit, at the expense not necessarily of Apple, but of its rival Android stablemates," Feldman said.

According leaked documents seen by the Cult of Android website, pre-orders of the Fire are averaging 50,000 units a day, a rate which could see Amazon notch up well over two million pre-orders before the device goes on sale on November 15. If it did hit such a figure, it would outdo the first month sales of the iPad.

But cheapness is always relative. If $199 sounds like a bargain, tablets are coming out of India priced below $50. One of them, the Aakash from UK-based DataWind, will retail at just $35 in India, though admittedly that is partly down to government subsidies - the low cost slates will be offered to students as India tries to catch up with other major emerging economies in terms of internet access. The cost of making the Aakash is about $70, says the local media. DataWind's CEO Suneet Singh Tuli told journalists: "It will cost as much as a vegetarian meal for two at a five-star hotel in Delhi. We wanted to show the world when China can break price points, India can do it better." The Android product will have Wi-Fi, 256Mbytes of RAM, a 2Gbytes microSD card expandable to 3Gbytes, and two USB ports.

Other tablets available in India are hitting low price points even without subsidy - for instance, the Magnum Pepper at $99, Mercury mTab at $192, Wespro ePad at $162, Teletech Magiq at $182 and even a 10-inch model from iBerry for $300.

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COMMENTS

Posted by geoffwhiting on Thursday 6th October, 2011

Very solid coverage. India's tablet market will be a great one to watch.

There, Samsung's Galaxy Tabs hold 45.8% of the tablet market there while the PlayBook has 21% and the iPads have 18.4%. Though this is all from before the Aakash's launch (and the launch of another student-oriented tablet coming at the end of the month)so Q1'12 numbers could give some great insight into exactly what price means.

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