Samsung, Toshiba 'me-too' tablets seek price edge to fight iPad

Samsung Electronics Co. and Toshiba Corp. unveiled tablet computers in Berlin yesterday, aiming to take market share from Apple Inc.'s iPad with their lower-priced "me-too" devices.

Toshiba said at the consumer electronics fair IFA that the recommended price for its Folio 100 tablet in Europe is 399 euros ($511), undercutting the iPad, which goes for about 499 euros in the region. Samsung's Galaxy Tab, which like Toshiba's Folio will debut in Europe next month, said it will let phone operators determine the price.

"Looking at the iPad price, alternative tablets should be sold at below $300 to be appealing to consumers unless you have a strong brand to support the premium or a carrier to subsidize the hardware," said Carolina Milanesi, a Gartner Inc. research director in the U.K.

Apple has sold more than 3 million iPad units since its April 3 introduction. The Cupertino, California-based company is "unlikely" to face a viable rival in the tablet market before 2011 and will continue to dominate the market in 2012, according to researcher ISuppli. Apple will have a 61.7 percent market share in 2012 in terms of units sold, from 74.1 percent this year, it estimates. ISuppli expects the tablet PC market to grow about five-fold between 2010 and 2012 to 81.6 million units.

"Apple has a huge jump on everybody in terms of the momentum that they've built at this point," said Rhoda Alexander, an analyst at El Segundo, California-based ISuppli.

Crowded MarketResearch In Motion Ltd. is planning to introduce in November a tablet with a 9.7-inch screen and Wi-Fi capability, according to two people familiar with the company's plans. Verizon Wireless and Google Inc. have discussed a tablet that would run on Android software, and Dell Inc. released its $299.99 Streak 5-inch tablet last month.Sony Corp., the world's third-largest maker of televisions, said yesterday it hasn't decided yet whether to offer its own tablet computer. It needs to be a "very appealing product that is going to be widely accepted, as opposed to a me-too product," said Kazuo Hirai, president of Tokyo-based Sony's Networked Products Services Group.Hirai said 23 companies are planning to bring tablet computers to market, making a price war inevitable.Samsung and Toshiba said they see strong demand and expect to garner sizable market shares in the years ahead."Analysts are forecasting maybe 13 million units this year and next year they are forecasting 30 million devices, including the (Galaxy) Tab devices.," said DJ Lee, Suwon, South Korea- based Samsung's sales head for mobile communications. "In my view, the global demand could be even bigger."Market ShareSamsung, which expects to sell through major U.S., European and Asian carriers, even in China, will coordinate pricing with the operators, although "we are working to give people a very attractive and competitive price," Lee said.Tokyo-based Toshiba, whose 10.1-inch screen tablet will connect to the Internet via Wi-Fi networks, could get a regional market share of as much as 20 percent next year, said Gianluca Dianese, head of marketing for Digital Products and Services in Europe, Africa and the Middle East, said in an interview."It's reasonable to expect a 15 percent to 20 percent market share by the end of 2011 in Europe," Dianese said.While price may help some of the manufacturers of tablets to grab market share, iSuppli's Alexander warned it may backfire if profit margins aren't high enough to keep pace with technological advances."If you aren't getting the profit margin on that product, you're going to have trouble keeping ahead in the leapfrog game which is part of this business: someone comes up behind you, jumps over what you've done and then you need to jump over them," she said.Tougher CompetitionThe greatest challenge for the "me-too" manufacturers will be marrying the content, operating system, touch technology and the various hardware components. Many will be picking from a pool of commonly available applications, as opposed to Apple's approach of tailoring application specifically to the device.Gartner's Milanesi said to avoid drastic price cuts, tablet makers may have to differentiate their products, especially as many work with Google's Android as their operating system."All tablets will draw from the same ecosystem so differentiation will be hard," she said. "The same as it is with smartphones."For many of the companies, the competition has only just begun, Milanesi said."Competition will be tougher and tougher in the tablet segment, especially when Taiwanese and Chinese companies start making these devices," she said. "To be appealing to consumers, tablets should be sold at below $300."