Remember the original iPad from 2010? Everyone knew Apple was going to launch a tablet (it’s just a big iPhone without the phone) months in advance, and pundits expected a sky-high price tag approaching $1,000. Why? Tablets were expensive to make. Big screen. Big battery. Blah, blah, blah.
Then, Apple received Applause when the iPad launched with a $499 price.
In typical Apple fashion, though, extra storage came at a premium so average selling prices were even more than $499. Since then, Apple has introduced newer, faster, lighter, thinner iPads and kept the price in the same range. Even the diminutive iPad mini is a mere quarter pound less weight, and $100 lighter on the pocketbook.
What about the competition?
It doesn’t seem possible that a competitor can make a better tablet and sell it for more, so Apple owns the premium end of the market, therefore, most of the industry’s profits.
What Apple’s competitors have managed to do is make tablets cheaper. And cheap. That appears to be the only way to compete against Apple. Lenovo just launched a budget line of Android tablets with three models, 7-inch, 8-inch, and 10-inches, respectively, priced between $129 and $249.
Is it any wonder that Apple owns the lion’s share of the smartphone and tablet industry’s profits?
How does a company make any money by manufacturing and selling an Android tablet for $129? Well, the answer is obvious. They don’t.
Think about the situation, though. Apple spends a lot of money to develop, update, and distribute iOS for iPhone and iPad. Apple’s own apps are best of breed on each devices. Apple owns and maintains an expensive ecosystem; retail stores, online shopping for apps and media, and, best of all, Apple doesn’t scrimp much on the manufacturing process (aluminum ain’t plastic, folks).
What does Lenovo need to do to compete?
Android OS is free, so Lenovo saves on OS development. Google’s Play app store and media store are free, so Lenovo saves money there, too. Lenovo doesn’t have retail stores (no Genius bar) and no ecosystem to speak of. Finally, Lenovo’s products don’t have the same hardware capability as Apple’s new line of iPads.
Everything about the process of developing and shipping a tablet is less expensive than Apple’s methods, therefore, Lenovo’s prices are much less. And they have to be. Otherwise, what’s the incentive to buy? What’s the incentive to switch from an iPad to a Lenovo Androided plastic tablet?
Android-based tablets, like their Android-based smartphones, outsell Apple’s iPad and iPhone by a large margin. When it comes to marketshare, as always (except iPod), Apple loses. And laughs all the way to the bank.