

IPad's Rivals Can't Beat It on Price - gabrielroth
http://www.nytimes.com/2011/03/07/technology/07tablet.html?hp

======
zdw
"Real artists ship"

Not trying to flame here, but Apple has a track record of shipping solid,
complete devices, at a great price point, with a known track record of
updates. They also have some seriously polished apps - software
differentiation is becoming more and more apparent.

The competition, not so much. You have Android devices that may or may not get
firmware updates, and "to be released" devices from HP and RIM.

I'd love to see some serious competition, but until the rest of the market can
drive prices down on hardware at the wholesale level, it's going to be rough
for everyone who isn't Apple.

~~~
mgkimsal
It's the track record that is really a huge barrier to entry now - cost/price
be damned.

Scenario 1 - Upstart company A which is new to the market comes up with a new
great hardware/software combo tablet or mobile PDA which kicks some serious
ass. Few people may trust that they'll be 'able to make a go of it' because
they're so small. Self-fulfilling prophecy, and that company may indeed have a
hard go of it. They're unknown - why should anyone trust them.

Scenario B - the Androids and MS and other 'established' players. They've had
a couple years to establish track records, and they stink. Unknown upgrade
paths from various vendors - mobile phone companies selling 1.6 Android
devices in mid 2010 with no plan to even attempt upgrades, but locking people
in to 2 year contracts, for example. MS' Zune being dropped after a couple
years, and the "PlaysForSure" debacle a couple years before that. Why trust
any of these vendors with your data/apps/music/money when Apple has a much
stronger track record of being around and offering _decent_ backwards
compatibility (compared to the competition)?

I honestly think people would really be willing to pay even more than Apple
prices for devices _if_ there was any hope of the company staying the course
with their decisions and not dropping products lines 18 months in the future.
People were lining up in droves to pay $699 for the original iPhone - no
carrier subsidy - because of the track record Apple has at delivering a good
experience. Honestly, really, I don't see anyone else in the CE/mobile space
with that sort of loyalty any more. I also do remember people camping out at
stores to get Windows 95 - MS _did_ have that sort of cred at one point, but
they've lost it and it'll take a lot of work to get it back.

------
mjfern
> _iPad's Rivals Can't Beat it on Price_

The title of this article causes me anguish. It should read "IPad's Rivals
Can't Beat it on Cost." Businesses compete on value and on cost. Value is the
benefit to the customer (value proposition) and cost is the fixed and variable
expenses to the firm for producing that value (cost structure). Value and cost
are strategic, and price is a tactical choice that follows from your value-
cost position and the competition. If a business offers more value at a given
price, relative to a competitor, it will gain market share. If a business has
a lower cost at a given price, relative to a competitor, it will have higher
margins.

Confusing price and cost has caused the downfall of established companies. For
instance, in 2003, Delta launched its Song subsidiary to compete with
Southwest Airlines and Jet Blue. Delta conceptualized Song as a "low-price
airline," while Southwest and Jet Blue are low-cost airlines. What happens
when you compete with low-prices, but are burdened by the high-cost structure
of a legacy airline, such as Delta? Song was disbanded in 2006, after
considerable losses.

~~~
teyc
> What happens when you compete with low-prices, but are burdened by the high-
> cost structure of a legacy airline, such as Delta? Song was disbanded in
> 2006, after considerable losses.

Actually, Qantas in Australia did pretty with Jetstar. They avoided
cannibalization of existing customers by running from non-mainstream airports,
being a lot stricter with check-in times (trading time for money), having
cheaper flight staff, and doing most of their businesses online.

------
guelo
I think all this bragging about price and also about the number of apps is
just premature. We are obviously at the beginning of the Android response. It
took Google a year to release their response to the iPad and Xoom is the first
product based on it. It was just released a couple weeks ago. You can argue
that the competition has been slow to respond but this is not the full
response yet, there is no way the iPad will own >90% of this market by the end
of the year.

By the end of this year there will be tons of android tablets and tons of
apps. As with the phones, the hardware will be all over the place in terms of
price and quality, but just as with the phones the onslaught of announcements
and features and price points will be too much and they will slowly but surely
become more and more compelling.

It's been said that 2011 will be the year of the tablet. Apple is once again
the king of the hill with a huge headstart. But the droids are coming. As
Anonymous says, expect them.

------
bane
One thing I both do and don't understand is all this fidgeting around with the
form factor. I think the Xoom is the closest to an iPad in form factor, but
the rest are all over the map.

While I do understand the desire to test out different sizes/weights/features
etc. to see if Apple was close but not quite spot on with their first shot out
of the gate (who knows? an 8" $1000 tablet could wipe the floor with
everybody), it overlooks the simple fact that in the mind of consumers the
iPad represents what a tablet looks and feels like.

If you are going to make a tablet then, you _must_ fit the consumer's
expectations, not try and carve a niche somewhere else.

Make a tablet, the exact shape and size and weight of an iPad, make it $50-100
cheaper all around, toss in a regular 'ol USB slot and an SD card and you'll
probably have a hit. _none_ of the present, weirdly shaped and overly priced
Android tablets have any appeal to me whatsoever.

Better to credibly compete in the market, then when you own some part of it,
fiddle around with the form factor and see what else sells.

~~~
voxmatt
"Make a tablet, the exact shape and size and weight of an iPad, make it
$50-100 cheaper all around, toss in a regular 'ol USB slot and an SD card and
you'll probably have a hit. none of the present, weirdly shaped and overly
priced Android tablets have any appeal to me whatsoever."

If it were that simple, somebody would have already done it.

I think this article is pretty spot on—Apple has made it almost impossible to
compete at the prices they've set at the level of quality the iPad represents.
Maybe you can get to the iPad pricing, but you'll have to cut corners and it
just won't feel like that solid slab of aluminum.

~~~
bane
_Apple has made it almost impossible to compete at the prices they've set at
the level of quality the iPad represents._

I totally agree, nobody can lock down all of the supply of a given part in
some absolutely necessary, but short supplied, channel better than Apple. It's
really one of their most amazing business strategies.

------
trotsky
Is there any evidence that samsung or motorola are trying to beat apple on
price? The high end smartphones from both manufacturers seem to happily sit
around the same price point as apple's phone.

Give it another six months or so and I'm sure you'll see some decidedly
cheaper dual core 3.0 tablets from the 2nd tier oems like huwai as mentioned,
archos, viewsonic, etc. Now, _they_ want to compete on price. Whether tablets
are commodity items or status symbols remains to be seen though. So far it
seems mostly like the latter.

~~~
mixmax
If history is anything to go by they will probably start out as status
symbols, and become commodities as they spread into the market. Mobile phones
are a good example.

------
teyc
The App store is only one of the ways that Apple builds out its network
advantage.

Facetime; developer ecosystem; having complementary products like computers,
ipod, Mobile.Me means that every customer Apple captures has a higher lifetime
value than a Xoom customer to Motorola.

------
brisance
There's another thing that its competitors can't match. Steve Jobs's
willingness to ruthlessly "knife the baby" if necessary, even if the "baby" is
a product that is a large source of revenue. The iPod Mini was EOL'ed with the
introduction of the iPod Nano.

------
mixmax
_Yet another advantage is Apple’s wide net of its own global retail shops and
online stores; for customers, this means they can avoid a markup from a third
party like Best Buy._

This is only partially correct. Apple's retail stores are expensive to run,
and that cost is Apple's.

~~~
huxley
You're right that there is a cost associated with having the stores but those
are largely fixed costs and the amount of product Apple sells through the
stores is so massive that the markup is pretty small compared to the markup
associated with selling at Best Buy, et al.

Apple stores are among the most profitable retail venues in the world.

~~~
mixmax
That fixed cost still has to be spread across all sales. Also, while the Apple
stores are highly successful they are also a potential financial liability if
things go sour since they only stock one productline.

~~~
huxley
The fact that they sell primarily Apple products is an advantage even if
things went sour.

The Apple store gives Apple promotional and marketing support, it is a support
venue. The customer walks in to an environment designed to promote Apple
products not dishwashers, Xooms and Xbox 360s.

Things might go sour at some point, but Apple is sitting on $50 billion in
cash and liquid assets, even if everything went south sales-wise, the
advantages of exclusively promoting their products is probably worth it to
them.

Their retail partners have been fair-weather friends and more likely to be a
negative factor if things went sour than any fixed costs of running the
stores.

~~~
mixmax
This was exactly the reasoning of the high-end hi-fi retailer B&O - they
opened flagship stores around the world, and it didn't turn out well.

~~~
silvestrov
The problem is that B&O doesn't sell anything that young people are interested
in. So they don't have the same amount of traffic (of people buying stuff) in
their stores.

They have 2 major product lines:

1) Why pay 3-5 times as much for a simply rebranded Sony tv? In old days B&O
made their own electronics, but todays B&O tv is just a standard display
wrapped in a B&O plastic frame and is no better than a standard Sony TV.

2) hifi sets (cd-players, tape recorders, vinyl players, etc) are obsolete
because young people have all their music on their iPod/computer.

B&O is a company that sells quality horse wagons in a time when young people
have switched to cars.

------
valjavec
"So you have to trust that the dots will somehow connect in your future. You
have to trust in something — your gut, destiny, life, karma, whatever."

Looks like all the dots are connecting perfects for Jobs and Apple more and
more.

~~~
nolite
The magnificent speech in question

<http://youtu.be/UF8uR6Z6KLc>

------
cma
The nook color is on sale for $200 and runs honeycomb. Same basic specs as the
galaxy tab. Obviously not something the NYT could recommend, but any HN reader
should find it easy to set up.

------
scythe
AlwaysInnovating's touchbook beats the iPad on price, last I checked.

<http://alwaysinnovating.com/>

------
sliverstorm
Isn't this funny? Usually Apple products are ridiculously expensive. Have they
_ever_ held the but-it's-cheap card before?

~~~
artsrc
The Mac Mini is cheap.

At various times the iPod was about as 'cheaper than the competition' as the
iPad is now.

The iPod touch has been cheap relative to comparable products. The Nintendo 3D
hand held is launching at $350 here.

~~~
sliverstorm
The Mac Mini is cheap compared to other Macs. Not compared to comprable
computers, IIRC, so long as we are considering performance an important
metric.

I don't know if the 3D handheld is a good comparison. It's expensive because
it has 3D for goodness sake.

~~~
wtallis
The Mac Mini is a great deal compared to everything that's not at least 3
times larger, especially if you consider performance, because everything else
the size of the Mac Mini has an Intel Atom at best.

