Shipping vs. selling: Would-be iPad killers to sell dirt cheap just to “digest inventory overstock”

Steve Jobs at iPad 2 introduction in March 2011 rhetorically asked if 2011 “will be year of the copycats”, highlighting several times the iPad’s attractive selling price as a big advantages.

The billions in profits from iOS gadgets that Apple strategically invests to pre-pay long-term component deals is a crucial enabling factor that has been allowing the company to over time bring down the prices and make its gear more and more affordable to the growing number of consumers. Nowhere is this more evident than with iPad, which debuted with a “breakthrough” price of  five hundred bucks, originally pricing the vast majority of competing tablets out of the market.

Despite a recent Strategy Analytics survey asserting Android’s share of the tablet market in June 2011 at 30 percent, in reality those numbers are inflated as all competing devices (which, by the way, include borderline devices such as e-readers and de-featured tablets) struggle to make it past store shelves. It’s the difference between shipping and actually selling something: iPad gets picked by millions of consumers each quarter whereas Apple’s rivals settle with channel shipments. Realizing their products are collecting dust on store shelves, tablet makers are scrambling to slash prices once again in a last-minute effort to “digest inventory overstock”, reports DigiTimes, an Asian trade publication:

Non-Apple tablet PC players, facing the fact their devices are having weaker sales than their order volumes, while demand from the retail channel has been quickly shrinking, are expected to start cutting their tablet prices by the end of September to digest inventory and minimize losses, and the decisions are expected to trigger a new price war within the tablet industry, according to sources from notebook players.

The latest price cuts will arrive on top of the already slashed prices forcing Motorola, Hewlett-Packard, Asustek and Acer to offer their products from as low as $370. The sources talk about “at least two waves of price cuts from the end of September to the year-end holiday”, possibly reducing the average price of non-Apple tablets further to $300. It should come as a surprise that underpricing iPad is no guarantee of success because technology alone (and price) “is not enough”, as Apple boasts in its cool iPad commercials (you need apps, too!). Apple could also pull the iPhone 4-3GS trick with the iPad, selling iPad 2 at a reduced price of, say, $350, as the $499 iPad 3 debuts. One thing’s for sure: 2011 won’t be the year of copycats. So, who’s not selling their warez?

According to the report, it’s pretty much most of non-Apple tablet players. By the way, don’t you find it interesting how the media is increasingly referring to other tablets as “non-Apple” or “non-iPad”? This is another indication that the tablet market is pretty much all iPad, despite what questionable surveys would have you believe. The report goes on to note that Asustek shipped 700,000 tablet units from May to July, but sold only 500,000 units. It gets worse for others. Acer is “gradually reducing” orders and Samsung and Motorola are seeing weaker-than-expected demand for their products, too. And with Apple barring Samsung from selling their Galaxy Tab in Australia and the European Union, Samsung’s tablet prospects won’t get any better this year. The same applies to BlackBerry maker Research In Motion and HTC, with both companies “already placing their hopes in 2012”.

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