Invasion of the Low-Cost Tablets

The low-cost tablet invasion is in full swing and it will only help drive more and more people to tablets as their primary mobile computing devices.

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Jared Newman /

Two weeks ago, I received a press release from a company called D2 announcing its new 16-gigabyte 7-inch tablet running Android Jelly Bean 4.1 and priced at $89. This is sold exclusively at Big Lots and went on sale March 1. This new tablet also has a micro SD slot so you can upgrade its memory, making it a very versatile, yet low-cost tablet solution.

That same day I got a note from HP stating that it introduced a new 7-inch tablet of its own, known as the Slate7, also using Android Jelly Bean 4.1 for $169. Unlike the D2, the Slate7 has a 3-megapixel rear-facing camera and a VGA camera on the front. It goes on sale in April.

Of course, Google has its own low-cost tablet called the Nexus 7. And Amazon’s 7-inch Kindle Fire HD sells for $199. And over at Fry’s, our local tech supermart, I recently saw at least three non-branded tablets selling for $99 or less.

With all of this low-cost tablet activity going on, it seems pretty clear that the invasion of the low-cost tablet is in full swing. They’re very affordable for anyone who wants or needs a tablet.

Although this race to the bottom in low-cost tablets will not deliver any major profits for those making these cheap tablets, this is really good news for consumers. It also suggests that we are about to launch the “tablet-in-every-room” phase of the tablet market — one that could have the profound effect of speeding up the integration of all things digital into our lifestyles.

By nature of the amount of tablets I have for various reasons, I already have a tablet in every room of my house. Some are iPads and some are Android tablets of various operating system versions. And one or two of them are based on Microsoft’s Windows 8 operating system. All have at least two common denominators among them: The first is a web browser. This means that every tablet I have gives me unlimited access to the Internet via the web browser. The second common denominator between all of them is identical apps. Well over 100,000 apps are the same on Android and iOS, making it possible to have, for example, my Evernote files on all of my tablets, or the Kindle e-book reader or news readers like Flipboard and Pulse. And many of these apps are or will be on Windows 8 tablets in the near future.

While each operating system has its distinct advantages and the iOS ecosystem is the richest of the three, all of these tablets work as tablets, meaning that they are small, lightweight and very portable. This makes them ideal for music, watching movies or TV shows and reading books and magazines on whatever tablet is the closest to us at the time we need one.

In our research, we are already seeing a high number of homes that have two tablets and even some with three tablets that are both personal and communal in their use. With tablets priced in the $89-$99 range now becoming commonplace, it won’t be long before we could see multiple tablets in most homes, thus driving the role of tablets deeper into our digital lifestyles.

With this type of tablet pricing, it is easy to see how low-cost 7-inch tablets could dominate the tablet market by the end of this year. In fact, we are predicting that these smaller and cheaper tablets will represent 65% of all tablets sold in the U.S. by the end of 2013. While I see Apple’s iPad Mini as a major player in this smaller tablet arena, it’s Android that is the operating system of choice in the really low end of the tablet space. I have no doubt that this operating system will probably dominate the low end of the tablet market.

If these smaller and cheaper tablets represent the major market for tablets, this puts Microsoft in a rather sticky position. To date, the company has put most of its R&D and marketing efforts into larger tablets. However, we hear that an updated version of Windows 8 called Windows Blue has been created for use on screens from 7 inches to 10.1 inches. We hear Windows Blue should be out in time for back-to-school season, and if prices are reasonable, Microsoft could have a fighting chance to also be a player in the smaller-sized tablet market that’s already dominated by Apple and Google.

There is another interesting dynamic that could come about because tablets are becoming so inexpensive. There is a real possibility that they could be subsidized. A good example might come from media companies who have a lot to gain via some sort of subscription program. For example, there is a great app called Next Issue that delivers over 70 magazines for $15 a month. This is one of the great bargains and on tablets they read very well.

If a tablet can retail for $89, its cost to a company like Next Issue may be no more than $55-$60 or so. They could buy these in huge quantities and then give them free to new subscribers who agree to a 24 -month subscription plan. This would attract more potential customers, thus driving up subscriptions and covering the cost of the free tablets in the process.

I could also imagine cable companies doing something similar but in this case charging perhaps a $3-$4 per month fee for the tablet as they do now for set top boxes, giving users the cable TV experience while on the go. This would ensure more eyeballs seeing ads more often — something that makes cable companies even more enticing to the advertising industry.

The low-cost tablet invasion is in full swing and it will only help drive more and more people to tablets as their primary mobile computing devices. These cheaper and smaller tablets could soon become integrated into the tech fabric of our lives and hopefully drive new apps, services and ways people use them to enhance their lives.

Bajarin is the president of Creative Strategies Inc., a technology industry analysis and market-intelligence firm in Silicon Valley. He contributes to Big Picture, an opinion column that appears every Monday on TIME Tech.