|Google 7-inch tablet PCs to bring price-cut pressure on other vendors|
Monica Chen, Taipei; Joseph Tsai, DIGITIMES [Wednesday 28 March 2012]
Google, in order to compete with Amazon, will cooperate with Asustek Computer to launch a 7-inch inexpensive tablet PC in May-June 2012 and this is expected to bring pressure of price cuts upon other vendors, including Acer, Lenovo and Samsung Electronics, and in turn diminish gross margins for Taiwan-based supply chain makers, according to industry sources.
Since Amazon's new Kindle Fire, set to launch in the third quarter, is expected to be priced around US$199-299, Google will price its tablet PC at US$199 to even out the price advantage.
However, Google and Amazon's price war may seriously impact the pricing of 7-inch tablet PCs, forcing the market to enter fierce price competition.
Currently, both Acer and Lenovo's 7-inch tablet PCs have already dropped to a price range of around US$279, leaving Asustek Computer's 7-inch MeMO 171 and some of Samsung's 7.7-inch and 7-inch models still priced above US$500; however, since Asustek plans to launch its new MeMO 370T with a price of US$249 in the near future, Samsung may soon be forced to follow suit to drop its prices, while some second-tier white-box players are even reducing their tablet PC prices to below US$159 to survive.
Although tablet PC products currently have an average gross margin of 10-15%, as tablet PC prices continue to drop, while related specifications are rising, gross margins are expected to drop rapidly, forcing downstream vendors and upstream component makers to fight over the already-slim profits.