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Motorola Xoom Discounted Again In The Tablet Race To The Bottom

There were such high hopes for the Motorola (NYSE: MMI) Xoom when it was first unveiled at the beginning of this year: meticulously crafted, souped up with new features and… selling for the princely sum of $799. Up against the best-selling iPad, so full of content and almost half the price for the cheapest model if you bought it without subsidies, the Xoom was bound to be a sales disappointment. Motorola has been trying to make amends on that, selling progressively less expensive versions of the device, with this week seeing the latest installment in that strategy: a version of the tablet selling for $379.

The new Xoom, which is initially being sold by Best Buy, is being marketed as a “family tablet” now. It is effectively the WiFi-only version of the Xoom that first went on sale in March, but now with only 16GB of memory. Eventually the price of the Family Xoom will rise to $399, according to the WSJ.

That WiFi version, with 32GB of memory, is selling for $499, which is also the entry-level price for the iPad.

But although this is clearly a discount on the past device, has the boat zoomed away now for the Xoom?

With the pared-down Kindle Fire from Amazon (NSDQ: AMZN) now hitting the market at $199, other tablet makers, such as RIM (NSDQ: RIMM), have been aggressively discounting their tablets, but it has been with an unclear strategy as to how to really pick up sales: a device that has not ignited the public at one price point is not necessarily going to do it at one $100 or $200 lower.

The only one that seems to have really captured buying demand through a discounting policy was HP (NYSE: HPQ), which, deciding it would pull out of the tablet market altogether, sold its TouchPads through a fire sale, selling the most basic devices for as low as $99.

Motorola has not gone quite that low yet; but so far its strategy has failed to produce a real competitive force against the iPad. According to its most recent figures, Motorola says that it has shipped 690,000 tablets so far this year — no word on how many of those have actually sold. We may have an update with more concrete information on October 27, when Motorola Mobility reports its Q3 earnings.

As a point of comparison, Apple (NSDQ: AAPL) will be reporting its earnings tomorrow, and analysts are guessing between 12 million and 14 million iPads will be sold.

But if you think Motorola, RIM or HP are the only ones getting their tablets discounted, think again: even Apple’s iPad can also be had for next to nothing. It has been offered free by some carriers like Softbank when users sign up to premium contracts. And in France, Orange is running a student-buying program offering the iPad for as little as €1 ($1.30).

It’s probably fair to argue that Apple would have probably cornered the market even without those special deals — although they will have certainly helped pick up the second and third tier of buyers after a good run at the early adopters, a luxury that Motorola and the others can likely only imagine.

One Response to “Motorola Xoom Discounted Again In The Tablet Race To The Bottom”

  1. You know if everybody (except Apple, of course) had strongly discounted their tablets when they came out, and maybe have Google eat the cost, that could’ve probably drummed up sales quite a bit, similar to the TouchPad fire sale though not necessarily that extreme.  That might have then spawned more developer interest in Android tablets earlier on, which might have in turn resulted in more consumer interest.

    Now finally the Kindle Fire is here at an excellent price/performance ratio – that will probably give developers a reason to write Android apps.  A little late though.

    Basically, if Android tablets don’t succeed, it’s all Google’s fault.  :-b