Google Amazon Price War to Change Lower Segment Tab Prices

March 30, 2012, By Sanjeev Ramachandran

We have told you earlier how the height of irony happens when Google, the Android parent, wants to compete with the most successful Android tablet on the market, the Kindle Fire from Amazon.

Inspired by the potential performance of the low-priced Android tablet, Google, reportedly, is planning to bring out a $199 tablet with the help of Asus.

Sources close to Asus has hinted that the 7- inch tablet may hit the market in May or June of this year itself.  Though it is yet to be seen if such a cheaper tablet will do good against Kindle Fire which has already amazed even Apple with its market growth, the resulting price war is going to change the game in the lower segment of the tablet market.

It will surely affect the major tablet makers who are also eyeing at the lower segment of the market. Acer, Lenovo and Samsung will be forced to go for a price cut on their tablets once the 7 inch tab from Google launches in the market.

Presently, Acer and Lenovo are selling their 7 inch tabs for $279, while the 7 inch MEMO 171 from Asus and similar models from Samsung are priced above $500. Though the price war between Google and Amazon is yet to start, some gadget makers at the lower segment has already dropped the price of their tabs to below $159 to survive.

Amazon will put its new Kindle Fire within a $199-299 range; so other players too will have to drop the prices to match it. The impact will be more on the 10-15% average gross margin enjoyed by manufacturers from tablets. It will drop as prices drop and quality of features go up. The price war and the resulting price drop will also affect the profit of the upstream supply chain partners too. But customers will get better price tags, right?

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