TouchPad Dumping Has Changed Tablet Pricing

The TouchPad "dumping" by HP ($99) set off a frenzy of buying and led HP to briefly reconsider its plan to discontinue the device. HP remains undecided about whether it will simply license WebOS to third parties or sell it outright. HTC is reportedly among those considering buying WebOS, if it's for sale, although Samsung has rejected the notion. 

Whether buying WebOS is smart or futile is the subject for another discussion.  

Regardless, the demand created for the lower-cost TouchPad may have been instrumental in convincing Amazon to price its forthcoming Kindle-Android tablet at $250 (the Nook Color is also $250). This pricing is speculation but pretty reliable speculation.

It may well be that just as there's a de facto $200 ceiling on smartphones (with carrier subsidy) there may now be a $300 or $350 ceiling emerging for non-Apple tablets. People haven't wanted "imitation" tablets that cost the same as iPads. Below is a chart from a ChangeWave survey about US consumer tablet demand. 

Screen shot 2011-09-13 at 11.34.56 AM 

Source: ChangeWave (via Fortune

But consumers will buy non-iPad tablets if they're substantially cheaper -- as the TouchPad rush indicated. 

Interestingly the publisher of the Philadelphia Inquirer, Philadelphia Daily News and Philly.com is offering a $99 tablet provided users agree to a two-year digital newspaper subscription. Two things are interesting about this: the $99 price point and the effort to use a wireless carrier business model in the context of a newspaper. 

So far non-iPads have yet to sell very well. For example, the 7" Samsung Galaxy Tab reportedly sold only a fraction out of millions shipped. But that will change if prices come down far enough -- again below $350 or $300. Then we'll see these devices take off and probably more tablet apps for Android, which basically don't exist right now. 

Apple will probably continue to keep its iPad prices where they are unless we see dramatic sales increases for Android tablets. We're still at least six months to a year from an answer to that question.