Fast Company

Forget That iPad, What's It Gonna Take To Put You In This $700 HTC Jetstream Tablet?

HP found the low end of the tablet pricing scale with its $99 TouchPad. Now it appears HTC, with its $700, AT&T 4G LTE-ready Android Jetstream tablet, is trying to see just how much you'll pay for a non-Apple tablet. (Does it come with a set of steak knives?)

This week, HTC announced the Jetstream, a 32GB Android tablet with a 1.3-megapixel camera and AT&T 4G LTE connectivity. Issue is it'll cost you $700, and requires a two-year contract with AT&T. Would you buy that over an iPad?

"Never mind an iPad, you can buy two 40-inch TVs for that price," says Sarah Rotman Epps, senior analyst at Forrester Research specializing in consumer product strategy. "It’s wishful thinking of HTC and AT&T to launch at this price point. Start the countdown to the fire sale, à la Motorola and HP."

Not only is it wishful thinking; it's borderline delusional for HTC to think it will be able to move units of the Jetstream at $700--the company isn't even offering a Wi-Fi version, and without contract, the tablet costs $850. Other iPad competitors in the space--the Samsung Galaxy Tab, Motorola Xoom, BlackBerry PlayBook--have been unable to compete with the iPad, even at competitive prices. Only the HP TouchPad has seen success--and only once it dropped the device's price by 80%, to $99. If HP found the bargain basement price (or something even lower) for a tablet, HTC might have found the cathedral ceiling. 

Big-Ticket Tablets

The high-priced devices (not) flying off shelves

1// HP Slate 500
HP's anti-TouchPad boasted an $800 price tag at launch--and runs Windows 7.

2// Motorola Xoom
Without carrier contract, Motorola's much-touted entry to the tablet game cost a whopping $800, too. After poor sales, however, Motorola decided to lower that price to $599.

3// Mervis iPad
Let's not leave Apple out of the mix! After all, there's Mervis's 64GB diamond-encrusted iPad, made up of 11.43 carats and only costing you the bargain price of $19,999. Did I mention it comes with 3G?

"It's definitely too high," says Ben Bajarin, a consumer technology analyst with Creative Strategies, referring to the Jetstream's cost. "They would have a hard time competing even if the price point was the same [as the iPad], let alone $200 more. The thing that's become glaringly clear is that if you're going to price something around or even more than the iPad, the product itself has to be surprisingly better than the iPad. And that's where people are falling short."

"HTC works with the carrier partners to set prices, and that's all the color I can provide," an HTC spokesperson tells Fast Company. When asked about the universal reaction to the news--Yahoo, ComputerWorld, the Huffington Post, Venturebeat, Gigaom, and others all questioned the Jetstream's high price--the spokesperson declined to comment.

It's hard to think of a single metric where a competitor in the tablet market outshines the iPad, at least enough to justify purchasing the device at the same price point (or possibly higher). By sales, performance, reviews, apps, and more, the iPad is the clear industry leader. Can any consumer justify spending more than what it would cost to purchase an iPad? "At this point, probably not," Bajarin says. "I think Apple has a whole lot more going for them than Android does beyond just any price advantage. They have a much more mature ecosystem. Until a product is, first of all, on par in terms of design, user experience, support and ecosystem, I don't see how [competitors] can price it anywhere near [what HTC is charging for the Jetstream]. That's just way too high. Consumers are going to look at [the Jetstream] as an unfamiliar product--and 4G LTE isn't that big of a draw yet for them to say, 'Well, that justifies the cost going up.' To some degree, it's going to help consumers easily make a decision to go toward a product they already know they're going to like."

It's certainly not the first tablet boldly priced higher than the iPad. The HP Slate 500 was marketed at an astonishing $800 when it first came out. ("Running Windows, no less," laughs Bajarin.)

The problem is that it's difficult to keep prices down on tablets when margins for the hardware are so low. HP, for example, took a significant hit to sell the TouchPad at the price of $99--it could've cost the company as much as $300 million. For other hardware players such as HTC and Samsung, it leaves limited options when they're not offering software and services like Apple does. "They're just in the hardware game," Bajarin says. "The only shot they have is on price. Because of that, they're pricing up [the devices] because they can't take a blood bath and lose money on the hardware when hardware is the only way they make money."

That's why experts in the space such as Forrester's Sarah Rotman Epps are so excited for Amazon's tablet. She estimates the device could sell between 3 to 5 million units in its first quarter alone. Why? Because it's rumored that Amazon's tablet would be marketed in the $250 to $300 range. And why can Amazon afford to sell at such a low price? Because they can make up for losses through software and services.

"Amazon is in an interesting position because they have more of a business model than just selling hardware," Bajarin says. "All signs are pointing to Amazon heavily discounting the cost of the hardware, but then being able to make that up in terms of sales of books or physical goods or any number of other ways."

Adds Bajarin, "It's that $250 to $300 range that is the sweet spot, where you wouldn't be taking such a blood bath on the hardware--but you're going to have to have a business model to make up for it in software or services."

As for the $700 Jetstream: Well, good luck, HTC.

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9 Comments

  • Santhosh George

    Price as a function of (costs + profits) is justified for HTCs decision - but what is in it for the consumer?
    If tablets were netbooks, high speed browsing (4G LTE) would be an added attraction. But iPad has re-defined tablets to be a collation of apps.
    A robust marketplace for apps is the biggest challenge for the non-Apple products and there lies an opportunity - Services than Hardware has potential

  • KeyProduction.co.uk - CD Repli

    I personally wouldn't. I don't know the specs but I bought a quad core PC from Dell a couple of month's ago for almost $700. I know they are different devices but I would expect something pretty amazing for that kind of money. Also funny how HP apparently may have spent 300 million to sell the touchpad for $99 because I heard they bought a UK firm recently for 12 billion because they want to get out of the hardware business. Doesn't sound like they are getting out anytime soon. I also thought they were the biggest PC maker in the world?

  • Wize Adz

    A $550 price reduction?

    Seriously, this thing costs more than an iPad.  And who exactly is going to buy a tablet that costs more than an iPad?

    A lot of the well-paid and gray-haired manager types that I work with LOVE-LOVE-LOVE the iPad.  They argue every day that PCs will die and we all use iPads.  Just like I argue every day that we should all use Linux -- it's beside the point, except that this is the first time these old guys have  experienced this kind of love-for-technology and the accompanying pushback from normal people.  The rest of the people I talk to seem to consider the iPad a rather nice gadget.The problem, of course, is a real computers cost less than an iPad.  The iPad is $500ish, and a low-end netbook will run you $3000ish.  The netbook is also a general purpose computer, not a reduced function compliment to your computer.  This is the kind of thing that you can kind-of ignore if you're an old guy who makes $100k/year (more than ~85% of us).  But, in order to be a disruptive technology, these reduced-functionality tablets must undercut the price of a computer or open up new applications/capabilities/markets -- and they're not doing either of these things at the moment.  There's some potential for the hype to be realized, though, if the prices fall faster than the prices on real computers fall.Don't get me wrong, the iPad is a wonderfully engineered device, with a great interface and a supurb design.  I'm not arguing that the iPad is a bad device, I'm arguing that it's function is complimentary to normal computers, and that it's a luxury good.  The iPad augments your computer, it doesn't replace it.I'm not one of those people talking down about a product I don't use.  My wife owns an iPad that her father  (one of those gray-haired >$100k types) bought for her, and we use it daily.  Combined with a Netflix subscription, the iPad has effectively replaced our TELEVISION and DVR and NOT OUT COMPUTERS.  And I haven't bought one for myself because, as value-oriented person, the price/performance just isn't there.  As parents of a young child, throwing $500 at a luxury computer peripheral, when I can get a more capable device for $300, just isn't going to happen.Putting a desktop operating system in a tablet form-factor is also a completely different game than what I'm talking about.Once Android tablets become more affordable, I have lots of uses for GPS/GSM-enabled Android tablets.  I'd love to add a modern navigation/entertainment system to my 13 year-old Ford by replacing the stereo with a 7" GPS-enabled Android tablet (connected to a modest car-stereo amplifier).  My well-worn old car has outlasted many generations of electronics (as do all vehicles) -- so a cheap and replaceable "avionics" module that I can swap out every 3 years or so would be an ideal and would keep my car feeling up-to-date, without having to buy a new one.  Another thing that has to happen before I can really use a tablet as my in-car navigation/entertainment system, though, is that mobile data plans need to be priced more reasonably -- and, as an AT&T customer, I can assure you that their pricing model is holding back my personal adoption of mobile electronics.  Even if the out-of-pocket "cost" for the tablet in the article is subsidized by AT&T's monthly subscription fee, people still pay the full cost of the tablet and the cost is still a deterrent.You may notice that I keep fixating on the price.  I feel the need to mention that wife and I aren't exactly poor.  Looking up my income, my household is somewhere between the 66th percentile and the 75th percentile in income, depending on how you count.  We're doing just fine, especially as parents of young children go.  We're also both technology enthusiasts, and well educated.  If we're declining to purchase tablets, then how exactly are companies like HTC going to sell them to the population at large?

  • Wize Adz

    Not sure what happened to the formatting of my comment.  It was much easier to read when I wrote it...

  • Chris Reich

    Price vs. value. What value does the $700 tablet offer beyond the Apple $599 I-Pad? I could see the value if the storage could get to the 250-500 GB range. I still like having my applications on board as the cloud seems vulnerable. I don't have the desire to hold up a dinner plate-sized pad to take a picture. So really, what's the big deal? Weight? Coolness? My recently purchased $500 Toshiba laptop does it all, has a 7 hour battery life and is amazingly light. At $500 is annually replaceable too.

    I agree with the writer. Get to the $300 price point, have the features of an I-Pad and you've got a game changer. If Amazon launched a tablet for $300, I'd buy it now.

    Chris Reich
    TeachU.com

  • cayman1235

    Pavlovs Dog and Music and Poker.

    It is a well known fact that music therapy affects various aspects of our life in this rapidly changing world. Apparently, music can be a great help behind a poker table of Las Vegas casino as well as in online poker room due to its special qualities. This theory is based on the previous experience and can be compared to Pavlov's dog phenomenon. Ivan Pavlov trained dogs to respond in a certain way to a particular stimulus or to be more specific respond to specific sound to drool on a command. In other words, if we can shape animal behavior, we can surely affect human behavior and music therapy is a solid proof of that influence. 

    Have you ever noticed the amount of musical devices surrounding players in exclusive poker rooms? It is if players consider melody to be the primary cause of their success. Indeed, these players put a safe bet on the table when they engage in music therapy since it is an acceptable tool that is widely employed in psychology, medicine, art, movies, linguistics, education and many other fields. Needless to say, music can do so much for poker players starting from concentration strategy and finishing with progression of playing skills. 

    How can we see any effects during live action game of poker? Well, the secret of music therapy is the ability to navigate the mood of the player. Certain type of music can bring happy emotions and raise your blood pressure to keep you awake and concentrated as oppose to other rhythms, which can awake negative feelings to make you indifferent to your environment. As a result, your emotional state will have a direct influence on the game's outcomes. 

    Usually, peaceful melodies evoke higher level of concentration in poker room and block external distractions. In that way, poker players who listen to Beethoven or Bach will have their minds strictly on the game and make correct strategic decisions. We refer to the given phenomenon as classical influence of music, which approves that certain stimulus can be connected with physical or intellectual reactions. As oppose to peaceful melodies, beats loaded with heavy luggage or negative energies will motivate aggressive behavior. Aggression leads to rage and rage leads to emotional instability, what is specifically bad during the poker game since poker is mainly a game of skills. 

    And if you do not want to address the success in poker game to the effects of music, ask professional poker players why they prefer to appear in front of the public beats headphones and carrying mp3 players in their pockets. I can tell you for sure that true professionals do not need any help to win online poker tournaments or World Series of Poker Championship for that matter, but they obviously benefit something from this musical transaction, right? Just think about it for a moment, if music cannot harm their performance, it sure does help a lot, considering the results. 

    The obvious conclusion is that by means of music, player can control his emotions, having connected the certain melody with the certain impulses in the brain and react in appropriate way towards concrete situation during poker game. We also saw that music is very powerful tool in terms of animal and human behavior, which can have different effects on the subjects when used appropriately.