The Implications of the Low Price Tablet EraReading Time: 3 minutes
I’ve been tracking nuances of the global tablet market since the origins of the category. As I emphasize in my analysis, we know not all tablets are created or used equally. I’ve also been adamant about explaining that, when I look at tablet usage data, we essentially have two tablet markets. Tablets with a brand on them from companies like Apple, Samsung, Lenovo, Dell, etc., and a huge market of white box tablets made by no-name brands, sold at prices in the $100 range.
Our usage research shows these low end tablets, counted in the category labeled “other” in data reports, are essentially being used as portable media players — larger pieces of glass to watch videos and play games. Very little web browsing or downloading of apps is done. However, with the price of these white box tablets, it is time to start thinking differently about their usage and ultimately the role they play in consumer’s lives and homes.
For much of the last three years, essentially the short life of the tablet category, these low cost white box tablets have sold in massive numbers in markets such as China, India, Russia, and a few others, but not much in developed markets like the US or UK. Last quarter however, something interesting happened that may very well signal a changing tide.
According to IDC, RCA joined the ranks of the top five global tablet vendors by shipments into the channel in Q3 2014. Here is the chart of the tablet model.
How did RCA go from essentially zero in shipments to the number five spot out of nowhere? To begin, we need context. I discovered RCA’s shipments were entirely to Walmart and the US market. To be clear, a US retailer amid heavy promotions propelled a new entrant with virtually no tablet market credibility to the number five position globally for Q3 2014 quarterly shipments. ((RCA was long sold off but a company named Venturer Electronics has the rights to the name for products like tablets and is the maker behind these devices.)) Here is the full lineup of RCA tablets.
Walmart offers the 10″ with a keyboard case for $129.99 and the 7″ with a keyboard case for $59.99. Here is my take on how this happened. Firstly, these are rock bottom prices. Knowing quite a bit about Walmart’s typical customer, they likely saw the tablets at these prices and, having a general interest in tablets to begin with, recognized the RCA name and figured they couldn’t be that bad. These are likely used in many of the same ways as white box tablets in emerging markets. For games, video, and some internet. And at these price points, these products essentially become disposable. Now this is where the point gets interesting. As these prices become the norm in retail outlets everywhere, why not just buy several and stick them in every room in the house? Put one next to your bed to be used for your bedside web browsing tablet and alarm clock or use it as a portable TV for the kitchen or the bathroom while getting ready for work. Take it outside to watch video by the pool or garden. Put three in the car and leave them there. Coffee table tablets, one for every child in the home, multiples in every room just laying around waiting to be used by whoever. At these prices, why not? If it breaks, just get another one. There is very little downside to treating them as disposable pieces of smart glass to be used in any number of fairly simplistic ways. Believe it or not, prices will keep getting cheaper and from more brands and in more retail outlets than Walmart, thus making the barrier to entry even lower and increasing the availability of these low cost tablets. Cheap, numerous, disposable pieces of smart glass in every US home. A fascinating and potentially disruptive change of dynamics could be around the corner.
Of course, our readers will start asking what does this mean for Apple. I have several thoughts. I still believe the iPad is being used to do something very different than what I have outlined. However, as much as I like the new iPad commercials, they highlight things that CAN be done with the iPad but that the majority DOES NOT do with an iPad most of the time. Unfortunately, the iPad is used to do simple things by simple users to do many of the tasks I’ve mentioned. The iPad is undoubtedly 300% more capable than all the low end tablets. However, my concern is the mass market has either not fully utilized those capabilities or more worryingly, has no real intention to do so. The tablet’s ultimate mass market appeal may very well be to simply have a general purpose piece of glass laying around for every person in the house to use for any number of very simple, mostly entertainment-based tasks. In this case, these low end tablets may outnumber humans per household. Which makes the tablet market number much larger than many have projected. But, for Apple, fighting the “good enough” battle with these low end tablets is a strand of thought worth working through.
These are still early days and I’m providing our readers with some observations to discuss. This could be something or it could be nothing.