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iPad 2 Forces Samsung To Reevaluate Galaxy Tab

Posted by Soulskill on from the competition-is-easy-except-for-the-competition-part dept.

An anonymous reader writes "Apple's iPad competitors are still spec-obsessed, and Apple's next-gen iPad coupled with the same price point is forcing Samsung to rethink its tablet strategy and pricing methodology altogether. The South Korean Yonhap News Agency relays a quote from Lee Don-joo, executive VP of Samsung's mobile division, about Samsung's upcoming Galaxy Tab 10.1 compared to the new iPad. 'We will have to improve the parts that are inadequate,' Don-joo said. 'Apple made it very thin.' Features aside, Samsung also finds itself in a bind price-wise. The upcoming Galaxy Tab model, complete with a 10.1-inch screen and Android 3.0, was initially going to be priced higher than the current 7-inch Galaxy Tab. Apple's iPad 2, however, is forcing Samsung to 'think that over.'"

8 of 520 comments (clear)

  1. Anyone know... by rsilvergun · · Score: 4, Interesting

    how is Apple making the iPad so cheap? Nobody tries to go head to head with Apple. It's a waste of time. They're just too hip. So you fight on price or you fight on features. If the other tablet makers are neck & neck with Apple on price there must be a reason....

    --
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    1. Re:Anyone know... by Drakino · · Score: 4, Interesting

      Apple's financials still show a majority of their profits come from the hardware. The App store is grouped in with the overall iTunes store, and remains a smidge over break even. That 30% Apple gets from paid apps helps to also pay for all the bandwidth free apps consume, along with the other free content in iTunes such as the podcasts they cache and help host.

      Apple is able to make the iPad and other devices cheeper due to controlling the supply chain and manufacturing to a very deep level. They made a strategic investment in flash (storage) years ago to ensure they always had access to what they need. They did the same again recently for displays. Apple has also moved to making their own batteries, enclosures and other components to help strip out any unnecessary cost. The unibody design they use in so many products, including iPad helps reduce manufacturing labor quite a bit. Instead of having a worker sit there screwing together all the internals to make a frame, then slapping a case around it, they instead just screw in all the components directly to the unibody case the machine spits out.

      Apple is one of the few companies out there that takes a lot of time to design everything down to the screws. A little bit of time spent paying a few designers to come up with a more efficient PCB layout and cabling assembly adds up when you make millions of a particular device.

    2. Re:Anyone know... by BearRanger · · Score: 5, Interesting

      This idea of "Apple making it back in the app store" needs to be squashed. Apple's financial disclosures make it clear how much money they make on the App Store/ iTunes Store. The profits are just beyond break even. Apple is and always has been a hardware company. Not only that, but they're now a hardware company that can leverage economies of scale with their suppliers.

      The reason the iPad is so cheap is because Apple buys components to make it in bulk. In some cases they'll buy the entire output of a supplier. There are also documented instances where Apple have provided the capital for suppliers to expand their production facilities in return for buying the complete output of those new facilities. This is easy to do for certain items that get used across your entire product line, such as flash memory. Doing this means Apple can get parts at prices their competitors can't match, and in return they can sell their products for lower prices. When you have Samsung making and selling you flash memory at a price they can't match for their own subsidiaries, you know you're doing something right. It's amazing planning on Apple's part and a testament to the faith they have in being able to deliver on their product roadmaps. Whatever Chief Operating Officer Tim Cook is getting paid has clearly been worth it.

    3. Re:Anyone know... by markdavis · · Score: 4, Interesting

      >"I hate to bring it up, but that's what everyone said *last year* when the iPad 1 launched"

      Not that *I* remember, and I follow this stuff pretty closely. People did NOT expect any good iPad competition until AFTER Google optimized Android for tablet use, which is what 3.0 (Honeycomb) is all about.

      As an aside, Apple went through the same thing with necessary changes to iOS for tablet use.

      Now that 3.0 is released, Android tablets will, indeed, take off. Samsung ridiculously overpriced their pre 3.0 tablets, just because they could get away with it. That will certainly end this year. Even the $600 price tag on the Xoom will probably fall significantly within this launch year. (People have spotted reliable intel that it will even be at Sam' s Club for $539 when first released, placing it below the iPad price). Even so, I am not sure if reasonable (powerful, complete) 10" 3.0 tablets will hit the $300 price point this year, though. $500? Certainly. $450? Probably. Anything else might be pushing it. The point is they will be priced lower than the respective iPad model (they HAVE to if they want to compete).

      Competition is a great thing... Samsung is just greedy and will (thankfully) have to stand aside if they can't play the game :)

    4. Re:Anyone know... by node+3 · · Score: 4, Interesting

      Apple's competitors have been up-speccing their machines quite a lot compared to the iPad. The original iPad has a paltry 256MB of memory compared to the GB most of the Android tablets are packing. They also include faster processors, fancier screens, tons of ports, etc...

      I've not heard of any with better screens than the iPad. Usually they have smaller screens or widescreens (both of which are worse for a tablet). Maybe that's 'fancy'?

      The memory and ports mean very little outside of the geek realm.

      But mostly they've been trying to keep profit margins healthy.

      At the cost of market share? No. They are so expensive because they can't beat or even match the iPad's price. Do you really think they can build their tablets cheaper than Apple does theirs, but are marking the products significantly more than Apple? Isn't the mantra here that it's Apple who is overpriced? So when Apple's prices are cheaper, instead of rethinking that assumption, you just assume Android tablets are so fantastic that they can mark their prices even higher? Really?

    5. Re:Anyone know... by peragrin · · Score: 4, Interesting

      if you have to wait a year for a third party to develop your useful apps then you have already lost.

      if you have to wait 18 months and then hack a security update onto your system because it is being blocked by your carrier you have already lost.

      Apple is developing good apps already paving the way for IOS developers. Google is letting other people do the heavy lifting and porting.

      --
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    6. Re:Anyone know... by Anubis+IV · · Score: 5, Interesting

      Just to preface my comments, I may be an Apple fanboy, but I love Android too, despite what it may sound like here. At the very least, I want to see Android thrive so that Apple is constantly spurred on to innovate. Even better, I want to see it surpass iOS in all regards, because as much as I love Apple, I love good products better. Also, I, personally, don't get this whole tablet thing yet. I think they're great for some people, but I have no plans to buy one for myself anytime soon, since I'd much rather just use my laptop.

      Moving on, you follow stuff closely. That's why you, quite reasonably, didn't expect Android to take off in the tablet market last year. Most people don't follow it as closely as you do. That's why there were quite a few people saying that it would happen.

      As for pricing, if the competition is going to try and price their products at 80-90% that of the iPad 2, as you suggest, they're in a bad place. At those numbers, the price difference between the "normal" device and the "premium" device is small enough that plenty of people will make the jump. Low-end PCs are significantly cheaper than Macs, so they can make it up in volume by filling in at a price point that is far lower than Apple wants to go, but when going head to head against Apple in the premium market, none of them can hold their own (the last numbers I saw were that Apple had ~90% market share in computers over $1000). The same has been true in the MP3 player market as well, of course.

      What really has allowed Android to be the exception is that Android has had a large retail and advertising presence thanks to the backing of the carriers that are using it to fend off market share advances by the iPhone's carriers (normal people don't actually know or care what Android is, so it certainly isn't because of consumer education and awareness, or even branding of Android as a platform). Those Android smart phones were being pushed heavily in their stores, oftentimes as a free upgrade, hence why it was able to pick up so much steam as a platform.

      In general, however, iOS adoption is still much higher than Android adoption (see GigaOm from last October, and note also that Apple announced 100M iPhones and 15M iPads sold to date as of this last week), since Apple has their own line of retail and online stores that have been successfully pushing out iOS devices for years. They are leveraging those stores for the iPad 2, but Honeycomb tablet manufacturers have nothing like that going for them. Carriers aren't advertising on TV or making big displays of Honeycomb devices at their retail stores, Apple gets better product placement and treatment in stores like Best Buy or Walmart, and the manufacturers don't have their own retail chains like Apple does.

      Not only that, but with the iPad and iPad 2 Apple is starting aggressively in terms of pricing, and no one has managed to make a device in its class that comes in at the sorts of discounts we see in the consumer PC space that allow them to sell in volume. Basically, they're trying to compete in the premium category without premium retail space, or, in many cases, even devices that could be reasonably considered to be premium in terms of build quality and features. And since they lack an ally that will use them as leverage against Apple, I don't see that situation changing anytime soon.

  2. Re:Excellent! by N1AK · · Score: 4, Interesting

    Maybe I'm just completely out of touch, but I'd much rather have a full-featured tablet than one that is 2mm thinner but doesn't have the features I want.

    You are completely out of touch if you think the difference in depth between the iPad and IPad 2 is as inconsequential as a 2mm change would be. Setting up a strawman (a fictional 2mm change) and attacking that, rather than 4.6mm (35% thinner) and also 127g lighter (16%).

    Obviously the size of the device is important, otherwise we'd all be happy walking around with devices the thickness of a novel. You might be both informed and think that the difference in this specific incidence is not important. Frankly I doubt it. I can say that having played with both devices the size and weight difference is noticable, and beneficial.

    I won't be buying an iPad because I have numerous issues with Apple's business practice. I do however greatly admire their current hardware. Hopefully other manufacturers won't ignore this in the next batch of android tablets because, frankly, I'm getting tired of waiting.