Originally published in the gdgt newsletter, sign up at gdgt.com/newsletter/
Samsung has done a pretty good job so far of positioning the recently-unveiled Galaxy Tab as not just the best Android tablet around, but as what is probably the most attractive alternative to the iPad -- or at least until HP / Palm roll out the PalmPad sometime next year. I haven't spent enough hands-on time with the Galaxy Tab to know for sure whether I want to buy one, but at the moment I'm leaning towards getting one when they go on sale in the States later this year.
That is, assuming the price is right. Considering the screen is smaller, I really don't want to pay more for the Tab than I paid for my iPad (i.e. $499), and for better or worse the average person is going to compare this thing to an iPad when it comes to pricing.
And that's where things start to get interesting. Samsung hasn't revealed anything about the Galaxy Tab's US pricing yet, but the 16GB 3G model is listed for pre-order on Amazon.co.uk at £599. US pricing for these things is usually better, but selling for the equivalent of $931 in the UK might make it tough -- but not impossible -- for them to get below $600 Stateside (for comparison the 3G 16GB iPad sells for $629 here and for £529 in Britain).
If Samsung can't get the Tab to the right price point it isn't just that they won't sell as many as they could have (duh), it's that not grabbing market share now could also have a longer-term impact on Samsung's presumed goal of being a major player in this emerging space. This a land rush, and during a land rush you have to be prepared to do what it takes to grab territory before it gets too crowded. (And believe me, it is going to get crowded, especially with undifferentiated Android tablets.) The simplest way to do this would be to be prepared to accept less than ideal margins -- possibly even lose some money -- over the short-term and pick a price for the Tab that'll make it feel like a no-brainer compared with the iPad.
This desire to keep the sticker price low is probably why Samsung decided to launch the Tab in partnership with all four major wireless carriers here in the US: so they could take advantage of those carrier subsidies to get the initial price point down and offer the Tab at a price that at first glance looks really competitive with the iPad (say $199 for a 16GB 3G Tab with contract versus $629 for the 16GB 3G iPad).
Getting all four major US wireless carriers on-board will undoubtedly help both with marketing and with retail distribution; don't underestimate the difference it makes to have stores that people can walk into and play with a device, not to mention carriers spending tens of millions of ad dollars, which they usually do for a flagship product. Samsung took a similar four carrier strategy with the Galaxy S smartphone (which sells for around $600 unlocked), releasing different variations for each carrier. And while that seems to have worked out -- sales are said to be strong -- but even given all this I'd be wary of relying primarily on the carriers to put the Tab over the top.
Why? Because while it's definitely attractive to use carrier subsidies to drive down your price, there's also the risk that consumers, many of whom are already locked into a two-year agreement for their smartphone, will balk at signing up for another long-term agreement. Even if it's just for a $25 or $30 a month data plan (none of the US carrier versions of the Tab will offer calling plans), for most consumers it's still a pretty big mental barrier to be crossed. This is almost certainly why Apple decided to suck it up and offer the 3G version of the iPad at a higher, unsubsidized price than the WiFi-only version, but without requiring a long-term data plan.
The other thing that partnering with the carriers does is make it a little trickier to price the WiFi-only version. The anchor price in most consumers' minds won't be the unsubsidized price of the 3G model, it'll be whatever that subsidized price is. If you see the Tab advertised for $299 and then walk into BestBuy and see it selling for $649 you're going to balk -- no matter what the price, the WiFi model will "feel" more expensive than it really is. If Samsung tries to counter this and prices the Tab aggressively they risk pissing off their carrier partners, who are trying to sell subsidized versions with lengthy contracts attached to them. The relationship between the price of the WiFi-only and and the price of the subsidized 3G version will do a lot to shape people's perception of the relative value of each, it's one reason why sales of unsubsidized phones have never been strong in the States.
It's attractive to think about tablets as big smartphones that need to be sold in the same way, but at the end of the day they're just not. Tablets aren't substitutes for smartphones, they're complements, and for a lot of people they're a third (or even fourth or fifth) mobile device, and expecting them to buy one with a data plan isn't realistic. There might not be a perfect solution given the constraints Samsung is operating under, but where you really don't want to end up is in a situation where consumers decide that spending $699 or $799 for an unsubsidized Tab feels too expensive, while the subsidized version at $99 or $199 locks them into a contract they don't want. The risk there is that they'll end up buying what feels like the safe choice: an iPad.
Discussion about
Samsung's Galaxy Tab pricing problem
I think your last paragraph sums it up nicely. People keep pointing out to me that unsubsidized smartphone prices are really up there and so the Galaxy Tab can justify a high price because its bigger and better. I disagree, this product category can't really be compared with phones.
Take me for example, I use a Galaxy S as my phone and love it. Would I buy a Galaxy tablet? I'm pretty luke warm on the idea, bottom line: it would need to be cheap for me to bite. I love my netbook. I love my smartphone. Sure, something in between would be nice, but I don't exactly need/want one real bad.
Here's the shocking part, I'm not a big Apple fan, I love my Android phone, but if I was forced to buy a tablet right now, it'd probably be an ipad. If someone like me (i.e. a gadget fan and happy Android and Samsung user) is not sold on the Tab, then that's not a good sign for the Tab. If its very keenly priced though..............
As I say, I think your last paragraph nicely sums up how a lot of us feel.
Take me for example, I use a Galaxy S as my phone and love it. Would I buy a Galaxy tablet? I'm pretty luke warm on the idea, bottom line: it would need to be cheap for me to bite. I love my netbook. I love my smartphone. Sure, something in between would be nice, but I don't exactly need/want one real bad.
Here's the shocking part, I'm not a big Apple fan, I love my Android phone, but if I was forced to buy a tablet right now, it'd probably be an ipad. If someone like me (i.e. a gadget fan and happy Android and Samsung user) is not sold on the Tab, then that's not a good sign for the Tab. If its very keenly priced though..............
As I say, I think your last paragraph nicely sums up how a lot of us feel.
Great analysis. I wrote on my site last week the reasons why I think the Galaxy Tab will flop. That said -- it can succeed. Get the price down and position it as a notebook/netbook alternative, not a iPad alternative.
fyi: brianshall.com/content/top-10-why-samsung-galaxy-t...
fyi: brianshall.com/content/top-10-why-samsung-galaxy-t...
While it's nice to say "let's not position the Galaxy Tab as an iPad alternative," what ever tablet devices that come out will almost certainly be compared to Apple's iPad. Look at what's being done with the latest Kindle commercial. The Kindle is clearly not an iPad alternative, but is still being compared anyway. Just my 2 cents.
I think you misunderestimate the willingness of people to exchange a growing share of their shrinking monthly income for the use of a product they hope will fill the hole in their lives created by our relentlessly consumption-driven culture. Cable TV, satellite TV, cable/DSL/fiber internet, WiFi plans, mobile voice plans, mobile data plans, text plans, tethering plans, mobile hotspot plans…the success of these and more has proven that most of us have never met a monthly charge we didn't like.
"Getting all four major US wireless carriers on-board will undoubtedly help both with marketing and with retail distribution; don't underestimate the difference it makes to have stores that people can walk into and play with a device"
I don't underestimate it, nor does Apple, but I think most of the other major retailers do. Walk into the an Apple Store and you can play with all the devices. Even in the Apple section in Best Buy, they have the same style table and real products out there to play with. BUT walk over in Best Buy to the phones section and *everything* is a dummy device. I don't care what a printed sticker of the DroidX screen looks like - I want to know what the real thing looks like. I fear the same thing will happen with the Samsung Tab. Sure, it will be in Best Buy (probably from multiple carriers), it'll be in the Sprint Store and Verizon Wireless stores (maybe they'll have customers once it's out, not just people lining up at the service desk). My fear is that the units on show will be plastic dummies with stickers for screens... I expect Apple gets a lot of people off the fence by allowing them to try the real thing in the store before they plunk down their cash.
I don't underestimate it, nor does Apple, but I think most of the other major retailers do. Walk into the an Apple Store and you can play with all the devices. Even in the Apple section in Best Buy, they have the same style table and real products out there to play with. BUT walk over in Best Buy to the phones section and *everything* is a dummy device. I don't care what a printed sticker of the DroidX screen looks like - I want to know what the real thing looks like. I fear the same thing will happen with the Samsung Tab. Sure, it will be in Best Buy (probably from multiple carriers), it'll be in the Sprint Store and Verizon Wireless stores (maybe they'll have customers once it's out, not just people lining up at the service desk). My fear is that the units on show will be plastic dummies with stickers for screens... I expect Apple gets a lot of people off the fence by allowing them to try the real thing in the store before they plunk down their cash.
I think I've sold about 20 iPads since I got mine in April. The devices sell themselves with the combination of ease of use and responsiveness. I don't see that in my Droid 2 from Verizon which requires a lot of geeky patience to get it to work without burning battery life or speed (mostly about getting rid of Motoblur gadgets). People are pretty merciless today -the device has to feel right at that moment or it won't sell. Droid's popularity is solely from inavailablity of iPhone on Verizon. It's very hard to get a good device together at the right price point. Subsidies are a sign of design failure on the part of Samsung -they need to compete in the Wifi-only space and they arent.
I Totally Agree With You On The Point That ApplevHave Definetlty Drawn In Buyers That They Would Not Have Had If It Were Not For The Facct That Everything Is Real
Regarding the price point:
amazon.co.uk lists the price as £599.00. As is common in Europe, this is the gross price, including the VAT (value-added tax, equivalent to sales tax in U.S.) @17.5%. Subtract the VAT of £89.21 to get the net price (excluding VAT) of £509.79. Converting that with today's interbank rate (www.oanda.com/currency/converter/), thats US $777 (instead of $931). So going below $600 is still tough, but not as tough as you thought.
amazon.co.uk lists the price as £599.00. As is common in Europe, this is the gross price, including the VAT (value-added tax, equivalent to sales tax in U.S.) @17.5%. Subtract the VAT of £89.21 to get the net price (excluding VAT) of £509.79. Converting that with today's interbank rate (www.oanda.com/currency/converter/), thats US $777 (instead of $931). So going below $600 is still tough, but not as tough as you thought.
You've certainly outlined the central problem: Sales of the "galaxy Tab' will be more or less limited to people who either do not have cell service or who are willing to switch in order to get the device on the (short-term) cheap. (And the few willing to carry TWO cell contracts.) And that is a rather severe limitation.
Had a play with one of these at the Samsung Experience in NYC. Battery died though! The guys there said it was a prototype and required it to be totally switched off to charge. Nice hardware though, was surprised.
To me, this device needs to be $100 cheaper than an iPad to even consider. That uk price that I'd have to pay, being British, is totally unrealistic. It's too close to a new MacBook.
To me, this device needs to be $100 cheaper than an iPad to even consider. That uk price that I'd have to pay, being British, is totally unrealistic. It's too close to a new MacBook.
A few months ago I was invited to witness a focus group discussing the iPad. All participants were adamant about their dislike of having to subscribe to a second long term wireless plan. This was loud and clear. The only wiggle room was to actually bundle it with fixed line internet instead (and even so it was less than unanimous).
It's hard to believe Samsung haven't conducted such research. A wireless plan is nowadays considered a necessary evil rather than a nice way to get a free device.
It's hard to believe Samsung haven't conducted such research. A wireless plan is nowadays considered a necessary evil rather than a nice way to get a free device.
I'm still up in the air as to whether I'll buy an iPad or an android based tablet.
I'm holding off on purchasing an android tablet until 3.0 comes out. I'm hoping the OS will be more responsive and built to take advantage of a larger screen space natively instead of relying on 3rd developers to fill in the gaps.
I have a Nexus One and have loved using it so far, but it's still rough around the edges compared to the iPhone/iOS.
I'm holding off on purchasing an android tablet until 3.0 comes out. I'm hoping the OS will be more responsive and built to take advantage of a larger screen space natively instead of relying on 3rd developers to fill in the gaps.
I have a Nexus One and have loved using it so far, but it's still rough around the edges compared to the iPhone/iOS.
I think the price for the Tablet needs to be no more than $630, the price of the 3g iPad. On the other hand, in some ways, the Tab is a superior device. Its only shortcomings are the smaller screen and, currently, a weaker selection of apps.
The question is, what kind of market is there for this kind of device. Does anyone really need this? Some have said they don't need this next to their netbook or laptop. I have a laptop that I never use. A tablet I would use since my phone screen is too small for me.
When quality tablets/pads are $200 without a contract, then their sales will really take off.
The question is, what kind of market is there for this kind of device. Does anyone really need this? Some have said they don't need this next to their netbook or laptop. I have a laptop that I never use. A tablet I would use since my phone screen is too small for me.
When quality tablets/pads are $200 without a contract, then their sales will really take off.
"Less max memory"? The Tab comes with 16gb minimum; I haven't seen any pricing for 32. But the Tab doesn't have max memory; it's upgradeable, unlike the iPad. If you bought the 16gb iPad, then decided you needed at least 32, then you'd have two iPads. With the Tab, you just go buy a 16gb stick of memory. Or two 8gb sticks, depending on how you plan to use it.
The upgradeable memory and the two cameras are two ways the Tab is a superior device, and lets not forget the fact that it has real multitasking; anything can run in the background, not just certain routines like a music player.
The upgradeable memory and the two cameras are two ways the Tab is a superior device, and lets not forget the fact that it has real multitasking; anything can run in the background, not just certain routines like a music player.
(What i dont like about the android environment is that icons are all diffrent shapes and that make it looks cheap ) Still i want my GALAXY IF its around $400, i like the camera option on it! you know what android platform i like the HTC, the have done a very nice work! well have a nice day guys and girls!
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Great post - I agree with your major points, at least considering my own situation:
Living in the US and working a fairly typical office job, I have wi-fi in my house at home, 3G on my smartphone when I'm out (for my 20 minute commute), and then an always-on wireless connection at the office.
Very hard to justify another 2-year commitment for something that I'd rarely use.
Still, a tablet like the iPad or Galaxy Tab might replace my aging 'personal' (not work-issued) laptop for web-surfing at home (on the couch or on the table).
I still think the iPad is a bit of a stretch at $499, considering that you can get a laptop for the same price that will multi-task better and is much better for typing (no bluetooth keyboard necessary)....so while a wi-fi only Samsung Tab is a tempting iPad alternative for me, it really needs to come in under $499 for me to take it seriously.
Then again, since I'm not in a rush to get a tablet, I'm holding out for the updated iPad to come out next year, and the competitive landscape in the US could be much different then than now.
Living in the US and working a fairly typical office job, I have wi-fi in my house at home, 3G on my smartphone when I'm out (for my 20 minute commute), and then an always-on wireless connection at the office.
Very hard to justify another 2-year commitment for something that I'd rarely use.
Still, a tablet like the iPad or Galaxy Tab might replace my aging 'personal' (not work-issued) laptop for web-surfing at home (on the couch or on the table).
I still think the iPad is a bit of a stretch at $499, considering that you can get a laptop for the same price that will multi-task better and is much better for typing (no bluetooth keyboard necessary)....so while a wi-fi only Samsung Tab is a tempting iPad alternative for me, it really needs to come in under $499 for me to take it seriously.
Then again, since I'm not in a rush to get a tablet, I'm holding out for the updated iPad to come out next year, and the competitive landscape in the US could be much different then than now.
*Excellent* analysis. I have gotten time with a Tab, and it's quite nice - the UI is exceptionally responsive (gotta love that Hummingbird) - and it feels solid in the hand. It's smaller than an iPad, which is a competitive differentiator, but it also means that consumers will understandably expect it to have a smaller price, especially since it will not be as versatile as the app-heavy iPad.
I'm in agreement. I own a Wifi only iPad and a new 4th gen iPod touch and finding I'm using the iPod touch far more often because of portability. We have Wifi at work and at home. My Verizon Droid 2 acts as a wifi hotspot negating need for a separate data plan. This price scheme is bound for failure. Look at Nokia's 3G booklet -a beautiful netbook which was best in class but was a failure. Samsung is going to end up as niche rather than popular use, especially with the a la carte data pricing for iPad on AT&T.
Why do I keep iPad -so I can avoid carrying a laptop, and to add pleasure to my work. The iPod with its wicked fast response time and multitasking really shines and I use it in preference to the Droid 2 as my primary communicator.
The conditions of high speed data access, telephony, and rich multimedia does not occur in one device or combination of devices and we are going to see different people getting different solutions.
Why do I keep iPad -so I can avoid carrying a laptop, and to add pleasure to my work. The iPod with its wicked fast response time and multitasking really shines and I use it in preference to the Droid 2 as my primary communicator.
The conditions of high speed data access, telephony, and rich multimedia does not occur in one device or combination of devices and we are going to see different people getting different solutions.
Great discussion points so far... this is a mighty interesting subject because as Peter so eloquently put it, "it's a land grab" and by spring 2011, if not by this Christmas, there will be a glut of tablets flooding the market. What will cause one tablet to rise above all others? What will cause gadget enthusiasts as well as "common folk" alike to buy up every available unit and put a given tablet into perpetual backorder? Two words -- USER EXPERIENCE... or more accurately a differentiated user experience superior to all other tablets. Judging by the popular android UI's currently available (e.g. HTC Sense UI, Samsung Touch Wiz, Motorola Blur [soon to be history], and stock Android) they don't hold a candle to iOS's usability (and I dare anyone to refute that fact!). So in my opinion, the first company to create a tablet user experience as good as, or superior to, the current gold standard (the ipad) will undoubtedly "grab the most land".
Interestingly you're seeing HTC already move in this direction with the next version of Sense seamlessly integrating cloud services. Of course the most glaring roadblock to achieving a "superior user experience" on Android is Android itself. Example -- just count all the confusingly different ways the Back button functions... and that's just the beginning... I've got a soft spot in my heart for Palm. I think they got a lot of things right with WebOS (and of course some things need more work). I think Palm has a HUGE opportunity here to create a differentiated, superior tablet user experience with WebOS and I sincerely hope they step up to the plate and swing for the fences ... it could mean billions to HP (I'm pretty sure HP's WAY ahead of me on this).
Interestingly you're seeing HTC already move in this direction with the next version of Sense seamlessly integrating cloud services. Of course the most glaring roadblock to achieving a "superior user experience" on Android is Android itself. Example -- just count all the confusingly different ways the Back button functions... and that's just the beginning... I've got a soft spot in my heart for Palm. I think they got a lot of things right with WebOS (and of course some things need more work). I think Palm has a HUGE opportunity here to create a differentiated, superior tablet user experience with WebOS and I sincerely hope they step up to the plate and swing for the fences ... it could mean billions to HP (I'm pretty sure HP's WAY ahead of me on this).
