Comments on: Here’s How Much Consumers Will Pay for a Tablet

By: Suzanne Bowen

Suzanne Bowen — Tue, 10 May 2011 14:07:02 +0000

Kevin, we like the realness of your unboxing of the Acer Google Tablet this month. In fact, our Techistan magazine team typed up the transcript and added your video review and script here: http://www.techistan.com/2011/05/09/gigaoms-kevin-tofel-not-toefl-reviews-the-acer-iconia-google-tablet/. We can’t wait to share the actual review later. Darn, we want to try it! :-D Suzanne

By: Dr. Phil Hendrix, immr

Dr. Phil Hendrix, immr — Sun, 13 Mar 2011 01:25:36 +0000

Substantial Demand for Tablets at Lower, Mid-range and Premium prices…
Results from our Tablet Choice Modeling study (in which consumers reveal their willingness to buy Tablets with varying combinations of features, prices and subsidies) indicate that the market for “affordable” and mid-range price Tablets is at least as large as that for premium-priced Tablets (like the iPad, Samsung Galaxy Tab, Motorola Zoom, etc.). We will be presenting these findings at the upcoming CTIA Tablet Conference (Orlando March 22).
Dr. Phil Hendrix, immr and GigaOm Pro analyst

By: Dr. Phil Hendrix, immr

Dr. Phil Hendrix, immr — Sun, 13 Mar 2011 01:22:48 +0000

Early adopters are usually willing to pay a premium…
It is important to recognize that consumers who have bought tablets to date are “early adopters” and represent the tip of the iceberg, relative to the market for Tablets as a whole. Compared to the 7% who have purchased a Tablet to date, nearly 6 times that number (40%) indicate that they are “very or extremely interested” in purchasing a Tablet for themselves or another HH member (spouse/children). Not surprisingly, early adopters are willing to pay a premium, while subsequent waves of purchasers – those interested who have not yet purchased – are likely to purchase at significantly lower prices. The more interesting question is the size of the market for Tablet models in various configurations and at different price points (including subsidies for 3G/4G data plans)… (continued in next comment)
Dr. Phil Hendrix, immr and GigaOm Pro analyst

By: Relwal

Relwal — Sat, 12 Mar 2011 19:37:40 +0000

This is all very amusing because data reported by Apple in their two most recent earnings calls indicates that the average price people actually paid for an iPad in Q4 2010 and Q1 2011 was $645 and $600 respectively.

By: Travis

Travis — Thu, 10 Mar 2011 03:34:55 +0000

As both you and Kevin have stated, its all about the marketing and getting the customer to desire the extra feature and converting that desire into an up-sell.

The two points I was getting at with trying to understand the cost of the radios are these:
1. If the goal of the Android table manufacturers is to gain mind-share and market-share of the tablet market, don’t charge an extra $200 for the model equipped with the cellular radio (I’m looking at you Motorola).
2. If push comes to shove, and I believe Steve Jobs has already alluded to this, Apple can drop the price of their 3G iPads by $100 (given Kevin’s estimate of the radio costing $25).

Dr. Hendrix, I look forward to seeing the additional information you’ve gather. Hopefully Kevin can do another writeup after your discussion at CTIA.

By: LegoMan

LegoMan — Wed, 09 Mar 2011 20:21:12 +0000

Don’t forget the certification costs for having the radio.

And as always, the price has more to do with marketing and the market, than it does with component costs.

By: RandyRPR

RandyRPR — Tue, 08 Mar 2011 17:54:44 +0000

Interesting comments about 3g radio costs versus retail price and price-elasticity. I suspect that the Android tablet makers are more interested in producing the higher equipped and priced models at this point due to the relative immaturity of the non-ipad market and supply side constraints. They would rather sell smaller numbers of more profitable units before trying to go one on one with the ipad (and others). All of which shows just how huge Apple’s lead really is at this point in time.

By: Dr. Phil Hendrix, immr

Dr. Phil Hendrix, immr — Tue, 08 Mar 2011 17:22:56 +0000

Travis – good question. In the Tablet study we also collected data (using Choice Modeling) on consumers’ willingness to pay for some 15 key Tablet features, including 3G connectivity (with and without Operator subsidies). We will share findings re: feature-price elasticity over the next couple of weeks. We will also be discussing findings at the Tablet Conference at CTIA (Orlando, March 22).

By: Kevin C. Tofel

Kevin C. Tofel — Tue, 08 Mar 2011 15:14:52 +0000

Not sure I agree with the first point of: “seems pretty likely that anyone going into one of those stores already has a pretty high liklihood of knowing exactly what they want.”

It’s arguable opinion, of course, but I hit an Apple store about once every 3 weeks; and not always the same store, it varies between 4 in the area. I see folks playing with devices and asking tons of questions because they’re *not* sure what they want. I think if they were, a number of those would simply buy online, get free shipping and be done with it.

By: Kevin C. Tofel

Kevin C. Tofel — Tue, 08 Mar 2011 15:12:31 +0000

I’m digging through some teardown data to get the exact cost difference but my gut says that adding 3G / GPS to the iPad is probably around a $25 cost to Apple. If that’s true (and I’m still looking to confirm), then I completely agree with you on the price differential. From Apple’s perspective: they’re not selling you an iPad with a different radio; they’re selling you an iPad with a coveted feature. ;)