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The Price Of Admission
Stromquist says there’s another reason why system builders have been able to get into the tablet game, one that has more to do with how the IT industry has changed over the past decade. “With notebooks years ago, you had to buy a lot of the parts through different distribution outlets, which was more expensive,” he said. “But now, components are cheaper and you can get all the necessary parts from one supplier.”
As options for sourcing components have grown, the prices for those parts have fallen. As a result, system builders can build customized tablets and still enjoy enough margins to make the effort worthwhile. “Tablets are comparable to notebooks—there’s not a ton of margin,” Covington said. “But it’s enough to make the business worthwhile. And obviously the demand is high.”
Still, with the explosion of new tablet devices and intense competition around such a hot new market, there’s bound to be pricing pressure. Motorola’s Xoom tablet was roundly criticized as being too expensive (the Wi-Fi only version cost $599 while the iPad starts at $499). “We tried to be under $500 even back in 2008,” Stromquist said.
But system builders are finding they can play in a wide price range. For example, Velocity Micro’s 7-inch T301 tablet, which offers 256 MB of RAM and 2 GB of storage, starts at $199, while CTL’s 10.1-inch 2goPad Pro, which boasts 2 GB of memory, 3G wireless and a 64-GB solid-state drive, starts at $799.
Another factor that’s helped system builders get into tablet making is the wide variety of components that are available. Instead of resorting to a cookie-cutter approach, computer makers have options for CPUs, storage, motherboards and, of course, operating systems. Tablet processors, for example, have suddenly flooded the market, from Intel’s new Atom Oak Trail platform and Qualcomm’s Snapdragon processor to Nvidia Tegra 2 model and numerous other ARM chips.
Still, system builders don’t expect the technical specifications to be as influential for customers as the application ecosystem and, of course, the form factor. “I don’t think the specs are going to accelerate the way they have for desktops,” Covington said. “It won’t be about speeds and feeds for tablets. It will be about the weight, look and feel of the device.”
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