Hewlett-Packard is losing money with their $99 TouchPad, but that’s ok because it’s all a part of a plan to battle with Apple, says Jonny Evans of ComputerWorld magazine, which will soon be emulated by other tablet manufacturers.
“There's no way you can even acquire the components used in these machines at prices as low as these,” Evans writes. “When you factor in manufacturing and shipping/distribution costs, all HP is doing is cutting its losses -- while starving everyone else in the anti-iPad market of what little oxygen remains by offering a device with features and at a price competitors can't conceivably match.”
And while HP’s unorthodox method might be annoying to tablet manufacturers, it will be a boon for consumers, since “a Holiday season price war inevitable. In other words, HP's decision to sell its tablets at a loss will eventually be emulated by all Apple's other competitors."
Evans cites an article in Digitimes that says Taiwan-based manufacturers have received large orders from companies seeking to produce tablets and applications in time for this upcoming holiday season.
Amazon has already announced that it will follow up on its success with the Kindle and will come out with a new tablet this year. The Amazon tablet will launch at $299, much cheaper than the iPad with comparable technology and allow it to be a “nasty competitor” to Apple, says Sarah Epps, an analyst at Forrester Research.
With 28.7 million iPads sold worldwide to date, Apple's lead in the tablet market looks invincible,” Epps writes in an executive summary of a report that analyzes Amazon’s ability to compete with Apple. “Enter Amazon.com, whose tablet can compete on price, content, and commerce. If it's launched at the right price with enough supply, we see Amazon's tablet easily selling 3 million to 5 million units in Q4 alone, disrupting not only Apple's product strategy but other tablet manufacturers' as well.”
Amazon’s headway into the tablet market will also make other tablets more appealing since they, like Amazon’s tablet, run on the Android system that many disfavor due to its less appealing app selection.
“Apple will maintain a strong lead in market share, but Amazon will gain ground quickly and give product strategists from media, software, retail, banking, and other firms a reason to kick app development for Android tablets into high gear,” Epps writes.
Despite the Amazon threat and eventual progress of other tablet manufacturers, Evans says that Apple still has the “nuclear option of dropping iPad prices in order to further starve the market.”
Or, Evans says, we can all just wait for the iPad 3 to turn the tablet industry upside down gain.